http://www.rssboard.org/rss-specificationHomepage Blog Slideren-usoaklynconsulting.comFrank Williamsonnohttp://oaklynconsulting.comFri, 22 Feb 2019 12:01:11 GMTHomepage Blog SliderHomepage Blog SliderTue, 12 Feb 2019 17:48:45 GMT2018 Middle Market Thought Leader of the Year Finalisthttp://oaklynconsulting.com/2018-middle-market-thought-leader-of-the-year-finalistFri, 01 Feb 2019 06:00:00 GMTFrank WilliamsonIt is an honor to be a finalist for the Alliance of Merger & Acquisition Advisors 2018 Middle Market Thought Leader of the Year Award.I founded Oaklyn Consulting in 2016 to address a problem facing small and middle-market private companies and their professional advisors:Investment banking and corporate finance advice is available almost exclusively from service providers who work for success fees, and as a result they help most when a deal of a certain size is the best outcome. But deals ar...]]>It is an honor to be a finalist for the Alliance of Merger & Acquisition Advisors 2018 Middle Market Thought Leader of the Year Award.I founded Oaklyn Consulting in 2016 to address a problem facing small and middle-market private companies and their professional advisors:Investment banking and corporate finance advice is available almost exclusively from service providers who work for success fees, and as a result they help most when a deal of a certain size is the best outcome. But deals ar...It is an honor to be a finalist for the Alliance of Merger & Acquisition Advisors 2018 Middle Market Thought Leader of the Year Award.

I founded Oaklyn Consulting in 2016 to address a problem facing small and middle-market private companies and their professional advisors:

Investment banking and corporate finance advice is available almost exclusively from service providers who work for success fees, and as a result they help most when a deal of a certain size is the best outcome. But deals are not always the answer, and the path to the answer is not always clear.

We believe that any business owner should have access to thoughtful investment banking advice when their business is at a crossroads.

So, we help small and middle-market private companies complete mergers, acquisitions, joint ventures and other strategic transactions; arrange financing; and manage investor relationships, all with time-based billing. We complement the work of investment bankers, lenders, lawyers, wealth managers and accountants.

Sharing knowledge through articles supports our mission and serves our larger vision that all entrepreneurs and business owners should have access to the capital they need to plan for the future, grow and thrive.

We very much appreciate that the Alliance of Merger & Acquisition Advisors has recognized our work.

]]>http://oaklynconsulting.com/2018-middle-market-thought-leader-of-the-year-finalistMemphis Business Journal: Has Your Business Reached a Pivot Point?http://oaklynconsulting.com/memphis-business-journal-has-your-business-reached-a-pivot-pointThu, 31 Jan 2019 06:00:00 GMTJonathan HoughtonHas your business reached a pivot point? Choosing to pursue a different business model isn’t an easy decision for entrepreneurs. Our CEO, Frank Williamson, writes in his latest Memphis Business Journal column how to know when it’s time to pivot your business — and the three paths for doing it successfully. ]]>Has your business reached a pivot point? Choosing to pursue a different business model isn’t an easy decision for entrepreneurs. Our CEO, Frank Williamson, writes in his latest Memphis Business Journal column how to know when it’s time to pivot your business — and the three paths for doing it successfully. Has your business reached a pivot point? Choosing to pursue a different business model isn’t an easy decision for entrepreneurs. Our CEO, Frank Williamson, writes in his latest Memphis Business Journal column how to know when it’s time to pivot your business — and the three paths for doing it successfully. Read the original column here.

Every business is launched with high hopes, but the reality is, the failure rate for new businesses is high.

According to the Small Business Association, only about half of new businesses survive for five years or longer, and only about a third make it past a full decade.

Yet, for all the businesses that don’t work, there are success stories where the owners of a failed enterprise pivoted to another promising idea — and struck gold. Take Twitter, which famously started life as a podcast subscription network called Odeo. Or consider Groupon, which originated as a “social good” fundraising website called The Point.

Pivoting to another business model isn’t an easy decision. It takes a willingness to look at your current situation honestly and free of ego. After that, there’s additional time and effort required to explore what your options look like. The process often starts with a simple question: Do I have a better idea worth pivoting to?

If you feel that your business has reached a dead end, and you have no particular ambitions for it other than staying solvent over the next three to five years, maybe it’s time to look for other options.

By pivoting, you’re choosing to take time and resources away from the main part of your business and putting them into an adjacent aspect that has potential. One of the biggest questions for owners in this situation is what to do with the business that you’re pivoting away from.

You have three choices if you decide to pivot: Shut it down, sell it off, or let it run down gradually while causing as little distraction as possible.

Shutting it down is the quickest option, though the cost of doing that is not free. There’s significant work involved in closing customer accounts, paying creditors, laying off staff, and canceling any registrations, permits, licenses, or business names. You’ll also need to sell any business equipment and other tangible property. All of this takes time away from what should be your main focus — planning for the launch of your new business.

Selling the business — or salvaging some value by selling any intellectual property or items such as a client list — might put you in a better financial position as you move forward. However, you’re likely going to be at a disadvantage in negotiations, as buyers will be aware of your position and not inclined to pay a premium. You need to look at whether there’s a realistic chance of selling your business in the marketplace, and if so, whether the terms are worth the effort involved.

Your last option is to simply mothball the unsuccessful parts of your business — that is, to leave them around to wind down naturally while putting in the absolute minimum amount of effort, keeping them from intruding on the direction you want to focus on.

A recent client of ours faced this decision with their product, a health care app for smartphones that didn’t bring in revenue as quickly as they had hoped. They had the opportunity to build another product serving the financial services industry, which appeared to have greater legs.

We helped them try to get rid of the first product by selling it, but they concluded that the cost of getting the deal done was not worth the effort. They ultimately decided to let it continue running and peter out on its own naturally.

Although business owners can achieve a pivot by pulling the plug on a business and pursuing a completely different model, they should also consider whether there are ways to reinvigorate their business through a strategic acquisition.

We once worked with an email marketing company with a niche specialty: working with doctors to make sure clients were keeping up with prescription medicines. The company was successful until one of its suppliers, a pharmacy that packed and shipped medicines, went bankrupt.

Although they had the option of simply finding another supplier, they instead made the decision to buy the division of their supplier that they relied on — essentially transforming themselves from an email marketing company to a mail-order pharmacy.

While this put them in a different business than they had run before, they found this option attractive because the business had greater scalability, and they had the ability to better control their fate.

Almost every business, even the successful ones, reaches a point where it has to prune or revise its services or products. By pausing to understand all your options — even those that might have previously seemed unattainable — business owners can confidently move forward into the next phase of their journey.

]]>http://oaklynconsulting.com/memphis-business-journal-has-your-business-reached-a-pivot-pointClient Case Study: SilverSage Physician Services fuels growth with bank financinghttp://oaklynconsulting.com/silversage-physician-servicesTue, 29 Jan 2019 06:00:00 GMTcwright@oaklynconsulting.comChris WrightOne of the most valuable attributes of the Oaklyn Consulting model is our ability to align the efforts of a project with the unique needs of each client. Such was the case in a recently completed engagement with SilverSage Physician Services, a rapidly growing company providing outsourced physician services to post-acute and long-term care facilities across the country.Setting the Stage:Though this stand-alone company was only 18 months old when Oaklyn became involved, the founder had previously...]]>One of the most valuable attributes of the Oaklyn Consulting model is our ability to align the efforts of a project with the unique needs of each client. Such was the case in a recently completed engagement with SilverSage Physician Services, a rapidly growing company providing outsourced physician services to post-acute and long-term care facilities across the country.Setting the Stage:Though this stand-alone company was only 18 months old when Oaklyn became involved, the founder had previously...One of the most valuable attributes of the Oaklyn Consulting model is our ability to align the efforts of a project with the unique needs of each client. Such was the case in a recently completed engagement with SilverSage Physician Services, a rapidly growing company providing outsourced physician services to post-acute and long-term care facilities across the country.

Setting the Stage:

Though this stand-alone company was only 18 months old when Oaklyn became involved, the founder had previously taken the same unique service offering from concept to 100+ facilities and tens of millions in revenue as a subsidiary of a much larger entity. Shortly after setting off on his own, the client found himself facing several issues and concerns:

The high salaries of physicians along with a natural lag in reimbursement from insurers combined to create a sizeable, albeit temporary, working capital need for each new contract – requiring liquidity the firm did not have

The founder was (rightly) resistant to raise equity capital and experience dilution for such a temporary need

To meet the timeline of previously signed contracts, SilverSage had just 45 days to secure an initial amount of funding and needed a partner who could “run fast”

Long-term, SilverSage sought a banking relationship that could grow with them

The client found it easy to gain initial banker interest, but for reasons that were unclear, they found it difficult to gain traction beyond the first interaction

Oaklyn Consulting’s Role:

We quickly found that the issue with banks was a matter of not speaking the same language. The client was simply having difficulty translating the compelling business opportunity into a financial model that articulated the same story

Armed with the requisite information, we helped the client run what closely resembled a growth equity capital raise process, but for bank financing and on a highly accelerated timeline

We advised the client on the selection of the best short-term debt solution, and teed up the client to continue pursuing the desired long-term banking partnership

SilverSage Physician Services had a proven business model and a stockpile of potential clients – they were the right people for the job. But like many business owners looking to grow rapidly for the first time, they didn’t have a strong enough handle on how to support their operational ambition with a thoughtful financing strategy. The “need” in this case was simply the perspective of a financially-savvy partner who had been there before – with companies their size, with companies financing rapid growth, and with companies the likes of which they aspired to become

]]>http://oaklynconsulting.com/silversage-physician-servicesSmall Biz Daily: When the Sale of Your Business Spurs an Identity Crisishttp://oaklynconsulting.com/small-biz-daily-when-the-sale-of-your-business-spurs-an-identity-crisisMon, 14 Jan 2019 06:00:00 GMTJonathan HoughtonWe often think of business ownership as a financial commitment, but it’s a personal one as well. In his latest column for Small Biz Daily, Frank Williamson explains how business owners' personal identities can factor into their decision to sell their businesses.Read the original article here.As the CEO of your company, you’re ultimately responsible for its success or failure. It’s tied to your own livelihood, as well as that of your employees, who have helped to build your company and ...]]>We often think of business ownership as a financial commitment, but it’s a personal one as well. In his latest column for Small Biz Daily, Frank Williamson explains how business owners' personal identities can factor into their decision to sell their businesses.Read the original article here.As the CEO of your company, you’re ultimately responsible for its success or failure. It’s tied to your own livelihood, as well as that of your employees, who have helped to build your company and ...We often think of business ownership as a financial commitment, but it’s a personal one as well. In his latest column for Small Biz Daily, Frank Williamson explains how business owners' personal identities can factor into their decision to sell their businesses.

As the CEO of your company, you’re ultimately responsible for its success or failure. It’s tied to your own livelihood, as well as that of your employees, who have helped to build your company and who you don’t want to leave in the lurch.

For entrepreneurs who’ve started their business from the ground up, its success is one of their life’s biggest accomplishments, and has taken up more hours than they can count. Their work truly becomes their life—sometimes to the exclusion of social activities, relaxation on the weekends, even family time.

Even if your current position as CEO has come by other means, having that level of long-term responsibility still leaves an impression on how you view yourself. And, in turn, it can affect your decision-making process if an opportunity eventually comes to sell your business.

If your job is your personal identity, then selling your business suddenly becomes something greater than a financial transaction. It’s a fundamental life change. You might end up making a tidy amount of money in exchange for your years of hard work, but then, what do you do now?

As a business consultant, I work with a range of entrepreneurs and CEOs who, in one form or another, are defined by their jobs. Each has an individual choice to make about whether selling their business is right for them.

Here are a few examples of business owners contemplating a sale of their business, and how their personal identities have played into that decision:

1. Born on third base (and knows it)

Some CEOs may not like to admit it, but they’re in their current position due to pure luck—because they happened to be part of the right bloodline. A successful family business can be a machine that runs uninterrupted for generations. For those who are born into a business and eventually graduate into running it, there’s often a realization that they were “born on third base,” so to speak. Their desire to try something different is invariably tempered by the nagging feeling that they might not be as successful if they were to start from square one in another industry.

This was the situation for a client of ours in his late 40s. He had initially planned to sell his family’s business and start again in a different industry. However, once he considered the idea more thoroughly and discussed it with friends who had started over in a similar manner—only to encounter unforeseen challenges—his enthusiasm for a second career faded. Ultimately, he decided that it was most important that the sale of his business result in his having the financial freedom to not have to work again.

It’s easy to forget that successful businesses don’t exist in a vacuum—they’re part of a wider industry community that grows over time. It’s perfectly reasonable to realize the potential drawbacks of an ambitious plan and not want that level of stress near the end of your career.

2. A servant to one’s clients

Service to clients, of course, is the core mission of a business—because happy customers are how you succeed and grow. And sometimes that image of being a servant, or a problem-solver, can become deeply ingrained in the personalities of business owners.

One client of ours owns an engineering business that produces devices to solve highly specific technical problems. It’s a rewarding occupation, partly because of the uniqueness of each project. Yet, because the leader of this company considers his role to be a successful “fixer,” he has had second thoughts about the possible sale of his business. Although he would make a nice profit by doing so, he’d also have to leave that aspect of his identity behind—unless he’s able to channel it into whatever hobby or project he takes on next.

3. The mayor

Owning a business is about the closest experience the average person will have to being a mayor of a city. Your employees look to you as the ultimate decision-maker, and you can set the tone of how your workplace operates. (Of course, it’s your employees’ decision on whether they want to keep working for you if you don’t set a tone they enjoy.)

On some level, business owners derive personal pride out of being the top dog. But by selling your company, all of that goes away. Your family at home tend to not follow orders in the same way your employees at work have to. So, if you sell your business, can you adjust to a daily situation where you’re no longer the center of things?

The big question

For any business owner thinking about selling, the big question is this: Can you accomplish your goals by selling, or can you restructure your business in a way that gives you more of the balance of structure and freedom that you ultimately desire?

If your organization has always had an organizational structure that centers around you, you may need to think about how to start changing that. Perhaps it includes delegating more responsibilities to senior staff members so that your daily presence in the office gradually becomes optional.

However, if you get a sense of personal fulfillment through your job that you can’t find elsewhere — and your business’s potential isn’t being hampered — then maybe there’s no good reason to change things just yet. That’s fine, too. As the saying goes, money can’t buy happiness.

While each business owner’s situation is unique, the first step of the decision process is to understand what the available options are. That work can be done most effectively with the help of a business consultant, who can offer unbiased, thoughtful advice.

]]>http://oaklynconsulting.com/small-biz-daily-when-the-sale-of-your-business-spurs-an-identity-crisisWho We Helped in 2018http://oaklynconsulting.com/who-we-helped-in-2018Wed, 19 Dec 2018 06:00:00 GMTFrank WilliamsonDuring the holiday season, our tradition is to reflect on the year and assess how we fulfilled our purpose as a firm. Maybe you do something similar.Oaklyn Consulting's purpose is to be a good citizen of the business communities where we operate, by handling situations that do not otherwise attract thoughtful investment banking advice.1. We did this by responding to introductions to CEO’s from counterparts in the business community, like investment banking firms, wealth managers, law f...]]>During the holiday season, our tradition is to reflect on the year and assess how we fulfilled our purpose as a firm. Maybe you do something similar.Oaklyn Consulting's purpose is to be a good citizen of the business communities where we operate, by handling situations that do not otherwise attract thoughtful investment banking advice.1. We did this by responding to introductions to CEO’s from counterparts in the business community, like investment banking firms, wealth managers, law f...During the holiday season, our tradition is to reflect on the year and assess how we fulfilled our purpose as a firm. Maybe you do something similar.

Oaklyn Consulting's purpose is to be a good citizen of the business communities where we operate, by handling situations that do not otherwise attract thoughtful investment banking advice.

1. We did this by responding to introductions to CEO’s from counterparts in the business community, like investment banking firms, wealth managers, law firms, accounting firms, banks, investors and entrepreneurs.

In 2018, we responded to 100 such introductions. Sometimes the conversation was exploratory, sometimes we were not the best fit, and sometimes we earned a client. However, every time, we tried to enrich the business community with a helpful option, while ensuring those who made the introduction were proud of placing their trust in us.

To honor this trust, we tried to make a business introduction for every one received.

2. We helped clients with situations where the traditional success fee-based business model for investment bankers wasn’t an option.

For example, in 2018, we supported business owners that wanted to pursue transactions only with partners they had already identified. These were in tech-enabled business services, insurance services, hotel management and distribution.

We helped companies experiencing distress to understand and navigate all their strategic options, deal and no-deal. These were in software, manufacturing, healthcare services and HR services.

We acted as counselor to CEOs navigating strategic choices for their businesses or investors. Generally, the choices involved how to structure strategic sales relationships that might lead to investments in the business or outright acquisition. These were in insurance brokerage, professional services and medical devices.

We helped early stage businesses run by veteran entrepreneurs pursue financing, whether strategic, venture capital or bank debt. These were involved in various aspects of healthcare and business services -- from staffing to process expertise to technology.

We oriented clients to the expectations of investors and acquirers, putting them in a position to maximize value when current investors exit. We helped them conceive and model long-term business plans.

And we helped a large company understand the sensitivities of building a business relationship with a small but strategic vendor.

3. We shared our expertise broadly in order to make capital easier for businesses to arrange.

We contributed to national publications for business owners and investors like Mergers & Acquisitions Magazine, The Journal of Private Equity, CFO Magazine, BOSS Magazine, Business.com, Small Biz Daily, and Mid-Market Talk.

And we continued to appear around the Southeast in publications like Business Journals in Memphis, Nashville, Jacksonville, and Upstate South Carolina; magazines like Business Alabama and EDGE; and newspapers like the Atlanta Journal Constitution and The Tennessean.

Our holiday wish is that 2019 will offer you new opportunities to pursue your purpose and the chance to top last year’s success. Should you find that capital worries are keeping you up nights, you can always turn to us for perspective.

How Mid-Market Companies Can Manage 'Crossroads' Situations

Across the spectrum of middle-market mergers and acquisitions, there’s a great big middle ground that specialist investment banking firms handle very well.

The investment banking business model works when the market itself is working. In this context, a working market means that there are multiple sellers of relatively similar “goods” — professionally run middle-market companies with continuing management teams being traded by professional investors — as well as multiple viable buyers interested in competing with each other to complete a deal.

In these cases, there’s a clear timeline for when shareholders want to generate cash returns, a professional board that identifies the best route, and a clear measurement of success, which is almost always that the seller completes a transaction at the highest available price.

There’s a very accomplished service industry of investment bankers, lawyers and accountants that identifies potential buyers, manages transaction risks and completes the deals efficiently. From the seller’s perspective, the traditional private company sale process — a limited auction — identifies several acquirer options, creates competition among them and closes a transaction on the best available market terms.

But not every situation is like this. In my experience, the 80/20 rule apples. Eighty percent of situations are relatively uncomplicated and well served by the process outlined above. However, 20 percent are not clean enough for the model to work. I call them “crossroads” deals.

I use that term because the board members or investors find themselves at, truly, a crossroads. The path forward isn’t so clear, sometimes time is of the essence, and the situation could ultimately play out in a variety of ways that complicate the normal sale processes for private companies.

In this spectrum of deals, “crossroads” situations are often at one extreme or the other. Sometimes the seller has too few options or, alternatively, has too many. In both places, from the perspective of advisors who work on the basis of success fees to efficiently complete transactions, they’re stuck.

In these situations, it can become necessary for investment bankers to function less as executors of a transaction, and instead to help weigh the pros and cons of hard decisions in a counselor-like role. Here are some examples:

1. Too many options

We see “too many options” arise most often with middle-market companies that are neither succeeding or failing, whose investors are venture capital and growth equity funds holding minority positions.

As time creates urgency for cash returns, the board needs to do something. But what? Everything is on the table. Options might include a large revenue-based deal with a strategic customer, a new tranche of minority investment, a stock deal with another relatively small and cash-poor company, a sale of strategic assets or, ideally, a sale of the entire company for an amount of cash that generates acceptable returns.

If you can do anything with a business, how do you assess and weigh the full range of options? The story we hear from venture capital and growth equity investors is “I thought an investment banker might help with one or two of these options, but I don’t know where to get help assessing all of them.”

Assessing these potential opportunities is what investment bankers do. However, in some of these cases, you’re asking investment bankers to weigh in with their expertise when it’s possible that their business model — in which they receive a commission from closing a deal — isn’t the best option. So, your service provider is put in the position of having to recommend something that’s against his own economic interests. The relationship is inherently fraught.

2. Too few options, or chasing down one opportunity

The other end of the spectrum is when a board has a really limited set of options — sometimes fortuitously, sometimes not.

Take a situation where a small company loses a major client. My firm recently worked with a business that made the majority of its income from a single big-box client. Using this name recognition, they were able to bring in other, smaller customers.

If that company were to lose its major client, the steep loss in income would force it to dramatically reshape itself, if it was able to survive at all. For a board of directors, that would leave a limited set of options, ranging from cutting costs to liquidating assets.

In other cases, management and the board feel that they have a good sense of where a business belongs in the market, and just want to pursue a single opportunity as thoroughly as possible. For example, a client of ours recently linked up with a industry counterpart, building on a long history of working together to create a joint venture that could execute on aggressive expansion plans. The terms of the deal reflected what both companies believe about the future — not the last 12 months’ earnings, as is typical. This transaction was completed without any serious consideration of seeking competing offers.

For many investment bankers, these “do it or don’t do it” situations — where a deal may happen but is in no way a certainty — also challenges the business model. If you’re going to do the work to negotiate a transaction, success-fee engagements almost demand seeking multiple offers, which increases the possibility that a deal gets done.

The middle-market investment banking industry has many people who are incredibly efficient at executing transactions. But for some situations, the industry also needs people who are incredibly flexible, and whose own success doesn’t depend on whether a deal ultimately takes place.

If you serve on the executive management team or board of directors of a middle-market company, it’s important to identify among your investment banking relationships which are best suited to efficient execution and which are better suited to strategy consulting with a financial bias. You need to build relationships with both, so that you have them when you need them.

There’s no better time than the present to begin the conversation about how you’ll handle these “crossroads” issues if they arise. Doing so will at least give you a solid starting point.

]]>http://oaklynconsulting.com/mergers-acquisitions-how-mid-market-companies-can-manage-crossroads-situationsClient Case Study: Hotel Equities Joins Forces With Virtua Partnershttp://oaklynconsulting.com/client-case-study-hotel-equities-joins-forces-with-virtua-partnersThu, 15 Nov 2018 06:00:00 GMTFrank WilliamsonIn the recent investment in Hotel Equities by Virtua Partners, we advised Hotel Equities on a mutually beneficial transaction by providing background advice, market benchmarks for business terms, risk assessment and negotiation support.After a year of discussions about the business partnership that they could create together, the owners of Hotel Equities, an Atlanta-based hotel management company, and Virtua Partners, a Phoenix-based private-equity firm specializing in commercial real estate, de...]]>In the recent investment in Hotel Equities by Virtua Partners, we advised Hotel Equities on a mutually beneficial transaction by providing background advice, market benchmarks for business terms, risk assessment and negotiation support.After a year of discussions about the business partnership that they could create together, the owners of Hotel Equities, an Atlanta-based hotel management company, and Virtua Partners, a Phoenix-based private-equity firm specializing in commercial real estate, de...In the recent investment in Hotel Equities by Virtua Partners, we advised Hotel Equities on a mutually beneficial transaction by providing background advice, market benchmarks for business terms, risk assessment and negotiation support.

After a year of discussions about the business partnership that they could create together, the owners of Hotel Equities, an Atlanta-based hotel management company, and Virtua Partners, a Phoenix-based private-equity firm specializing in commercial real estate, decided to formalize their relationship with an investment by Virtua Partners into Hotel Equities.

Issues & concerns

While the investment looked attractive, Hotel Equities’ owners needed confidence that the details of the transaction would result in a future business relationship that worked for them.

Founder and chairman Frederick Cerrone and president and CEO Brad Rahinsky were not concerned with managing the project of due diligence, which was similar to their real estate deals; they wanted experienced advice about the terms and risks of operating company transactions.

As conversations with Virtua Partners stopped and started, they needed someone who was present when needed, not pressing the deal but simply helping get it across the finish line.

Transaction Highlights

Hotel Equities is a founder-owned hotel management business that provides services to 115 properties across 25 states and two Canadian provinces with a total of $2 billion in assets under management.

For Cerrone, this transaction was an important liquidity event that would facilitate succession to the next generation of management. For Rahinsky, it was the foundation for an ambitious business plan to fuel growth by deploying more than $500 million into investments in hotel management company acquisitions, organic growth and various hospitality assets.

Our job was to help Cerrone and Rahinsky plan their moves, considering what aspects of the deal should be considered “market” and which not; giving insight into the financing environment being navigated by Virtua Partners; and assessing deal terms as they naturally changed during negotiation.

Oaklyn Consulting is an advisor of choice for helping privately-owned companies with capital strategy decisions and small or complex transactions. We serve as a guide, not a broker, providing middle market investment banking services as consultants with time-based billing.

]]>http://oaklynconsulting.com/client-case-study-hotel-equities-joins-forces-with-virtua-partnersJournal of Private Equity: Capital and Financial Strategies for Private Companieshttp://oaklynconsulting.com/capital-and-financial-strategies-for-private-companies-lessons-from-their-publicly-traded-brethrenTue, 11 Sep 2018 05:00:00 GMTJonathan HoughtonOaklyn Consulting CEO Frank Williamson has contributed an academic article, "Capital and Financial Strategies for Private Companies: Lessons from Their Publicly Traded Brethren," to the fall 2018 issue of The Journal of Private Equity. An abstract is below, and you can read the full article here.For a free copy of the article, please contact us at info@oaklynconsulting.com.Most businesses monitor their sales, marketing, and supply chain strategies. However, the companies with the ...]]>Oaklyn Consulting CEO Frank Williamson has contributed an academic article, "Capital and Financial Strategies for Private Companies: Lessons from Their Publicly Traded Brethren," to the fall 2018 issue of The Journal of Private Equity. An abstract is below, and you can read the full article here.For a free copy of the article, please contact us at info@oaklynconsulting.com.Most businesses monitor their sales, marketing, and supply chain strategies. However, the companies with the ...Oaklyn Consulting CEO Frank Williamson has contributed an academic article, "Capital and Financial Strategies for Private Companies: Lessons from Their Publicly Traded Brethren," to the fall 2018 issue of The Journal of Private Equity. An abstract is below, and you can read the full article here.

Most businesses monitor their sales, marketing, and supply chain strategies. However, the companies with the best governance and risk management also regularly evaluate their capital and financial plans, understanding and thinking ahead about their needs for liquidity, their mix of different types of funding, and the eventual need to return money to their investors. The exigencies of public markets, as well as the law, require public companies to carefully monitor their capital and financial strategies in this systematic way—and to make timely adjustments when this ongoing evaluation points out the need to do so. This necessity has created a process that well-run private companies would be wise to emulate. Accordingly, this article will explore how private companies adopt the governance and risk management practices of public companies to enhance their performance. More precisely, it will explore how they overcome the challenge of having little visibility into capital market conditions for private companies, a problem that public companies do not have because they must abide by regulations that mandate the disclosure of critical financial and operational information.

]]>http://oaklynconsulting.com/capital-and-financial-strategies-for-private-companies-lessons-from-their-publicly-traded-brethrenClient Case Study: Professional Disability Associates sells to The Advocator Grouphttp://oaklynconsulting.com/professional-disability-associatesTue, 04 Sep 2018 05:00:00 GMTFrank WilliamsonIn the recent sale of Professional Disability Associates to The Advocator Group, a subsidiary of Brown & Brown, we facilitated a mutually beneficial transaction by helping to manage the deal while the owners kept running the company. Deal or no deal, our eyes stayed on what was important and best for PDA’s owners.Issues & concernsAfter a year of discussions about how to team up with The Advocator Group, the owners of Professional Disability Associates sensed an offer to buy their company...]]>In the recent sale of Professional Disability Associates to The Advocator Group, a subsidiary of Brown & Brown, we facilitated a mutually beneficial transaction by helping to manage the deal while the owners kept running the company. Deal or no deal, our eyes stayed on what was important and best for PDA’s owners.Issues & concernsAfter a year of discussions about how to team up with The Advocator Group, the owners of Professional Disability Associates sensed an offer to buy their company...In the recent sale of Professional Disability Associates to The Advocator Group, a subsidiary of Brown & Brown, we facilitated a mutually beneficial transaction by helping to manage the deal while the owners kept running the company. Deal or no deal, our eyes stayed on what was important and best for PDA’s owners.

Issues & concerns

After a year of discussions about how to team up with The Advocator Group, the owners of Professional Disability Associates sensed an offer to buy their company was imminent; they worried that negotiating the transaction might distract them from running their business. PDA had earned some major growth opportunities that could not be jeopardized, merger or not.

The owners had concerns because they knew that selling a business is an enormous amount of work for an already busy executive team. The CEO needed help he could trust to get the merger done, while he kept running the company.

Because the owners value relationships they can trust and it was critical that they find a partner who shares their values, PDA was concerned that some M&A advisors might not always have an eye on what was best for them.

The buyer, The Advocator Group, serves similar customers to PDA and the leaders of both organizations had developed an ambitious business plan for their combined businesses. The Advocator Group is a division of publicly traded Brown & Brown Insurance, a repeat acquirer of insurance-related businesses.

PDA’s owners and their lawyer, John Carpenter of Bernstein Shur, were sensitive to the amount of work a transaction involves and wanted investment banking help that would facilitate a transaction, negotiate business terms and work well as part of a project team to pursue a single opportunity.

Our job was to fill one role on a collaborative deal team. We interfaced with Brown & Brown’s corporate development staff, while John Carpenter worked with Brown & Brown’s counsel and PDA’s leaders developed post-deal plans and relationships with their future colleagues. We helped by clarifying the business terms of the deal, from before the Letter of Intent through closing, and by mitigating the risk of confusion or miscommunication through the entire due diligence and negotiation process.

Oaklyn Consulting is the advisor of choice for helping middle-market companies with capital strategy decisions and small or complex transactions. We serve as a guide, not a broker, providing middle market investment banking services as consultants with a time-based billing structure.

]]>http://oaklynconsulting.com/professional-disability-associatesNooga.com: 6 Steps for Entrepreneurs to Capitalize on the Strong Economyhttp://oaklynconsulting.com/6-steps-for-entrepreneurs-to-capitalize-on-the-strong-economyMon, 27 Aug 2018 05:00:00 GMTJonathan HoughtonFrank Williamson recently spoke with Chattanooga news website Nooga.com about his advice for business owners seeking to take advantage of the current strong economy.Read the original article here.One local expert said the economy is strong and business owners can take advantage of that and grow their companies if they know the steps to take.Chattanooga-based Oaklyn Consulting advises clients about a range of business issues, including corporate finance, mergers, acquisitions and capital rai...]]>Frank Williamson recently spoke with Chattanooga news website Nooga.com about his advice for business owners seeking to take advantage of the current strong economy.Read the original article here.One local expert said the economy is strong and business owners can take advantage of that and grow their companies if they know the steps to take.Chattanooga-based Oaklyn Consulting advises clients about a range of business issues, including corporate finance, mergers, acquisitions and capital rai...Frank Williamson recently spoke with Chattanooga news website Nooga.com about his advice for business owners seeking to take advantage of the current strong economy.

One local expert said the economy is strong and business owners can take advantage of that and grow their companies if they know the steps to take.

Chattanooga-based Oaklyn Consultingadvises clients about a range of business issues, including corporate finance, mergers, acquisitions and capital raising.

Founder Frank Williamson has an MBA from Harvard and has handled countless mergers and acquisitions. Consultants at his company work not as brokers but as counselors to clients.

Williamson has six tips for local business owners who are looking to maximize investments, capitalize on the current economic climate and make sound business decisions.

Grow your company now.

Williamson said the economy is strong and now is the time to focus on sales and taking a strategic approach to pricing.

Forward-thinking business owners should realize that during a strong economy, there’s a prime opportunity to consider increasing prices in a “thoughtful way,” he said.

“In today’s economic climate, consumers aren’t watching their pennies quite as much,” he said. “It’s much smarter to build a modest pricing cushion while times are good than to be fighting for it when things are bad.”

Think about the big picture.

When things are going well, business owners should think beyond closing the next deal, he said.

Business owners should think about what kind of growth makes sense for the company and envision the steps to take to get to that place. That may mean taking steps to build strategic relationships that could result in a future sale or acquisition.

“If you want your destiny in your own hands, you have to look beyond the here and now and visualize what can be bigger,” he said.

Be prepared for the unexpected.

A lot can go wrong in business. A company could lose a big client or a top-performing employee, for example.

Business owners should think about the possibilities to avoid being blindsided.

“Yes, life is unpredictable, and you can’t fully plan for every little thing,” he said. “However, you can think through a few possible scenarios to assess your resiliency. Make a checklist and rank the scenarios by high, medium or low probability, then ask yourself how you would respond to each.”

Talk to your accountant about new tax law.

President Donald Trump’s new tax bill means there will be changes when businesses file tax information.

“If there is a year to think about taxes and how they might change for your business or aspects of your operation, this is the year,” he said.

Understand there is capital available and know what that means.

Williamson said that there is probably more money available than there are good companies to invest in.

That means that a company looking for capital should make a clear and strong case for how the money will be used and how it will be paid back, if applicable.

“Every investor needs to have confidence they will get their money back, with a return,” he said. “Lenders and investors are naturally skeptical. Most have been entrusted with other people’s money to invest, and they will not be reckless with their decisions.”

It also means that business owners should shop around because they know about the market for bank loans and private company investments until they ask, Williamson said.

“It is unpredictable exactly who will be interested in exactly what at exactly what time,” he also said. “The answer will be based partly on your situation and partly on the other options people have at hand.”

Be prepared when meeting with an investor or lender.

Have a plan about how to pay back the money. Acknowledge the risks. Explain what the future of the business looks like when cash flow is strong and show evidence of that.

Tell a story that makes sense, he said.

“Answer their questions fully, promptly and with sufficient context to support the story,” Williamson said.

]]>http://oaklynconsulting.com/6-steps-for-entrepreneurs-to-capitalize-on-the-strong-economyBusiness.com: 5 Ways to Grow Your Business in Today's Economyhttp://oaklynconsulting.com/5-ways-to-grow-your-business-in-todays-economyThu, 05 Jul 2018 05:00:00 GMTJonathan HoughtonIn his new article for Business.com, Frank Williamson discusses 5 ways that business owners can capitalize on the strength of the current economy. Read the original article here.These are good times for business owners. The stock market continues its nine-year rise, unemployment is low, bank loans are cheap and, perhaps most importantly, consumer confidence is up.Although we’ve been on an upward trajectory in the U.S. ]]>In his new article for Business.com, Frank Williamson discusses 5 ways that business owners can capitalize on the strength of the current economy. Read the original article here.These are good times for business owners. The stock market continues its nine-year rise, unemployment is low, bank loans are cheap and, perhaps most importantly, consumer confidence is up.Although we’ve been on an upward trajectory in the U.S. In his new article for Business.com, Frank Williamson discusses 5 ways that business owners can capitalize on the strength of the current economy. Read the original article here.

Although we’ve been on an upward trajectory in the U.S. over the last few years, we know that the economy is inherently cyclical, so it won’t stay this way forever. That’s why now is the time for entrepreneurs to be thinking about how they can grow their business by taking advantage of the wonderful economic climate that we’re currently experiencing.

Here are five ways for you to do that:

1. Sell.

Customers are in the mindset to buy right now, so if you own a business, now is a great time to be selling your product or service. Don’t waste time on any aspect of your business that isn’t time-sensitive. Let your customers know that you’re out there and focus on building new relationships.

To use a basketball analogy, now is the time to be out on the court and on the balls of your feet.

2. Be strategic about pricing.

Businesses price their products over time in a few different ways. Some don’t change their prices at all. Some, when their underlying costs go up, pass those costs through to customers.

Forward-thinking business owners should realize that when things are going well, it’s a good opportunity to think about increasing prices in a thoughtful way. The type of product or service you’re selling makes a difference in how you price it.

A company in my region of the country does good business selling warranty plans for cell phones. If this company chose to raise their prices by $0.25, for example, it would represent such a small portion of what their customers already pay that it wouldn’t make a difference to most of them, but it would raise the company’s bottom line.

In today’s economic climate, consumers aren’t watching their pennies quite as much. It’s much smarter to build a modest pricing cushion while times are good than to be fighting for it when things are bad.

3. Consider the big picture.

When you’ve got forward momentum, you should be thinking about closing the next sale, but you should be thinking beyond that. What type of growth makes the most sense for your company, and how can you take the first steps toward accomplishing that? What relationships can you start building that might result in a future sale or acquisition?

If you want your destiny in your own hands, you have to look beyond the here and now and visualize what can be bigger.

4. Plan for the unexpected in your business.

In the course of running a business, there’s a long laundry list of things that can go wrong — a key employee could take another job, you could lose a big client, the person in charge could have a heart attack.

If you don’t systematically think aboutthese situations — and, let’s be honest, few business owners do — you can be caught blind. Yes, life is unpredictable, and you can’t fully plan for every little thing. However, you can think through a few possible scenarios to assess your resiliency. Make a checklist and rank the scenarios by high, medium or low probability, then ask yourself how you would respond to each.

There’s no better time to prepare for the worst than right now, when everything’s going great.

5. Talk to your accountant.

As the hubbub over tax law changes finally settles, it appears that for many small businesses, the changes will not be as monumental as previously anticipated. However, this is still a good year to sit down with your accountant and understand your situation relative to taxes, and what your options are. People will be affected differently depending on where they live and what type of work they do.

On balance, I do think the government is trying to be more helpful by taking less, though that doesn’t apply to every person and every business. If you start thinking of the government as a business partner, then you can strategize how best to make that relationship as beneficial to you as possible.

]]>http://oaklynconsulting.com/5-ways-to-grow-your-business-in-todays-economyClient Case Study: Distribution Company, M&A Consultinghttp://oaklynconsulting.com/client-case-study-distribution-company-sell-side-consultingSat, 30 Jun 2018 17:00:00 GMTFrank WilliamsonIn the recent sale of a distribution company, we tailored a project that was very different from traditional M&A engagements... and it closed the deal.Issues & concernsBusiness owner desired investment banking advice and was disappointed that he was not able to engage a traditional M&A boutique due to the size of his companyWhile confident that he could identify and attract potential buyers, he worried about his lack of market and process knowledge to respond to bidsWhile experienced...]]>In the recent sale of a distribution company, we tailored a project that was very different from traditional M&A engagements... and it closed the deal.Issues & concernsBusiness owner desired investment banking advice and was disappointed that he was not able to engage a traditional M&A boutique due to the size of his companyWhile confident that he could identify and attract potential buyers, he worried about his lack of market and process knowledge to respond to bidsWhile experienced...In the recent sale of a distribution company, we tailored a project that was very different from traditional M&A engagements... and it closed the deal.

Issues & concerns

Business owner desired investment banking advice and was disappointed that he was not able to engage a traditional M&A boutique due to the size of his company

While confident that he could identify and attract potential buyers, he worried about his lack of market and process knowledge to respond to bids

While experienced in sales negotiations and share-of-revenue acquisitions, he was afraid he might miss something in negotiating the sale of his entire business

Transaction highlights

Distribution company with $15-20 million in sales

Buyer was a long-hold private equity fund; this was the fund's first investment

Owner wanted a limited, self-directed sale process

Our role was to support the owner's self-directed sale process with bid analysis, limited market outreach and background counsel during negotiations; our participation remains confidential

The project resulted from a boutique investment bank's referral

Oaklyn Consulting is the advisor of choice for helping middle-market companies with capital strategy decisions and small or complex transactions. We serve as a guide, not a broker, providing middle market investment banking services as consultants with time-based billing.

]]>http://oaklynconsulting.com/client-case-study-distribution-company-sell-side-consultingBusiness.com: When Selling Your Business Causes an Identity Crisishttp://oaklynconsulting.com/when-selling-your-business-causes-an-identity-crisisFri, 15 Jun 2018 05:00:00 GMTJonathan HoughtonFrank Williamson recently published an article on Business.com offering guidance for entrepreneurs whose personal identity may be tied to their role as business owners. Read the original article here.When you run a business, you're tied to it both financially and personally.The financial side is obvious: Your company's success or failure ultimately rides on your shoulders, affecting not just your personal livelihood but that of your employees.The emotional aspect of being a CEO is something that...]]>Frank Williamson recently published an article on Business.com offering guidance for entrepreneurs whose personal identity may be tied to their role as business owners. Read the original article here.When you run a business, you're tied to it both financially and personally.The financial side is obvious: Your company's success or failure ultimately rides on your shoulders, affecting not just your personal livelihood but that of your employees.The emotional aspect of being a CEO is something that...Frank Williamson recently published an article on Business.com offering guidance for entrepreneurs whose personal identity may be tied to their role as business owners. Read the original article here.

When you run a business, you're tied to it both financially and personally.

The financial side is obvious: Your company's success or failure ultimately rides on your shoulders, affecting not just your personal livelihood but that of your employees.

The emotional aspect of being a CEO is something that's not discussed very much. When you devote yourself to your company's success over a period of years, working long hours and thinking about it even in your downtime, it affects how you view yourself.

When your personal identity becomes tied to your role as a business owner, what happens if you receive an offer to sell? Can you envision a future for yourself that doesn't involve your business?

In my work guiding businesses through mergers and acquisitions, my clients include various types of owners who are defined by their jobs to some degree. For each of them, a bit of soul-searching is required to decide whether selling their company is the right choice.

If you're a business owner, perhaps you'll recognize something familiar in one of these examples.

1. Born on third base and knows it

Some business owners are beneficiaries – they didn't start their company but came and worked in it. They're aware that they started on third base, so to speak. They often feel fortunate to be part of a successful business but wonder if they could replicate that success in a different industry.

We worked with a business owner who was in his late 40s and not confident in his ability to start a new company. He had talked with friends who had sold their businesses and then started ones in different industries, only to realize it was much harder than expected. Many business owners forget that one reason they're successful is that they're part of a community and established in one particular industry.

If this situation applies to you, you may be mostly concerned with clearing enough from the sale of your business that you don't have to work again. Rather than having enough money to start a new business, you might want to avoid the pressure of starting something new that may not be successful.

2. A servant to clients

Every business exists to serve its clients, but some business owners take that duty very personally. One client of ours specializes in solving engineering problems for other businesses. His goal is to create and produce whatever device is needed in a cost-effective way; therefore, each project his company works on is new and unique.

Because this company functions as a "fixer," it's understandable that its owner would enjoy being seen as a servant of sorts. If he were to sell his business, he'd have a lot of cash, but he'd also be taking himself out of the problem-solving business. For whom would he solve problems for then? His spouse? And would she even want that?

When you take yourself out of the business you're in, you either have to give up that part of your identity or find a new area where you can continue to use those skills.

3. The mayor

There's a saying in our field that the closest thing to being king is being the owner of a business. You make decisions, nobody really second-guesses you, and you can either be benevolent to employees or rule with an iron fist. And let's face it, some people enjoy that substantial feeling of power.

In actuality, the position of CEO is more like being a mayor, since people working for you can always get another job. Part of your day-to-day work is building an environment where your employees want to work.

If you sell the business that you're in charge of, can you shift your identity and no longer be at the center of things? Appointing yourself mayor at home may not be pleasant for your loved ones.

Questions to ask

Business owners contemplating a sale should ask themselves if doing so will really accomplish their goals, or are there other things they could do with their business that would offer the appropriate balance of structure and freedom?

If you've staffed your organization in such a way where it can operate without you, then you might have the option of transitioning to a less-active role, such as chairman of the board. If you don't have that organizational structure – which in itself might say something about your personality – then you might have fewer options when you're ready to exit.

This type of major decision won't necessarily come at the end of your career. Sometimes it happens midway through, and for some business owners, it happens more than once during a career.

While the right choice will be different for every person and every situation, the first step in all cases is taking a realistic look at the needs of your stakeholders – yourself included – and understanding the available options. The best investment bankers and M&A advisers are counselors who can help you understand and compare alternatives.

]]>http://oaklynconsulting.com/when-selling-your-business-causes-an-identity-crisisSmall Biz Daily: How to View Your Business Like an Investorhttp://oaklynconsulting.com/how-to-view-your-business-like-an-investorTue, 29 May 2018 05:00:00 GMTJonathan HoughtonFrank Williamson recently had a column published in Small Biz Daily offering advice to entrepreneurs on how to make their businesses more attractive to potential investors.Read the original article here.Starting a business takes a lot of effort and commitment. Because of this, it’s likely that your business means more to you than just a source of income.The company that you’ve created is an extension of you. It’s a community you’re the leader of, a place you call home for a large part of your wa...]]>Frank Williamson recently had a column published in Small Biz Daily offering advice to entrepreneurs on how to make their businesses more attractive to potential investors.Read the original article here.Starting a business takes a lot of effort and commitment. Because of this, it’s likely that your business means more to you than just a source of income.The company that you’ve created is an extension of you. It’s a community you’re the leader of, a place you call home for a large part of your wa...Frank Williamson recently had a column published in Small Biz Daily offering advice to entrepreneurs on how to make their businesses more attractive to potential investors.

Starting a business takes a lot of effort and commitment. Because of this, it’s likely that your business means more to you than just a source of income.

The company that you’ve created is an extension of you. It’s a community you’re the leader of, a place you call home for a large part of your waking life.

While having a personal connection to your company and a desire to help it grow can boost your chances of getting the most value for it when it’s time to sell, you don’t want to be so wrapped up in your business that you can’t step back and see it like a potential buyer sees it.

I have worked with many small- and medium-sized businesses to help assess their companies’ strengths and weaknesses — information that allowed these companies to make improvements that boosted their sale price.

You may think of your business as a close-knit community, but keep in mind that investors care more about your business as an asset. As you plan for the potential sale of your business, it’s critical that all of your decisions are based on this reality.

Here are some thoughts on how to do that:

1. Take a step back.

Seeing the big picture will probably require you to take a break from day-to-day obligations. It means working on your business, rather than working in it.

When your focus is working in the business, the needs of customers and employees distract you from seeing bigger problems and opportunities. When your focus is working on your business, your priority is making sure that your company is running at its highest potential. This may include developing long-term customer contracts that are easily transferable if your business changes ownership, or standardizing procedures so the business can run without you.

2. Solidify your five-year plan.

Thinking far into the future is difficult for many business owners. Most have a broad outline for the next few months. Very few actually have goals set for the next year, much less the next five years. With other priorities capturing your attention, anything that’s not a dire situation will get pushed to the bottom of the stack.

However, investors are most concerned with how a business will grow five to seven years into the future. They must see how will your business make them money.

As a business owner, are you even in a position to request an investor’s money if you don’t know where your business is heading?

The future may be hard to determine, but business trends can help foretell your business’s potential. Piloting your business plan across various scenarios will reveal how your plan will hold up against obstacles.

3. Tell investors the good and the bad.

Nothing will hurt the sale of your business more than uncertainty. Investors are unlikely to invest in your business if risks aren’t quantified, so make sure you never answer a question with “It can’t be estimated.”

Telling investors negative facts about your business isn’t always a bad idea. They will see through unrealistic optimism and question your knowledge of the business if you can’t delineate the problems as well as the opportunities.

Be upfront in communicating any risks your business faces. Hearing about bad news later on in the process will be a major red flag that could kill a deal. Transparency and trust go hand in hand, and failure to report on dangers early on will only cause a domino effect in which they question if you are hiding anything else.

4. Remember that it’s all about the numbers.

The underlying question an investor will ask is “How do I make sure I get my money back?” It is your job as a business owner to show that a reasonable return on their investment is not a far-fetched idea. Appraise your business honestly, and elaborate on ideas that will ensure that investors see an attractive return on their money as an attainable goal.

By clearly outlining your company’s intentions and potential growth, you can give your business a shot at meriting attention from a worthy investor.

]]>http://oaklynconsulting.com/how-to-view-your-business-like-an-investorMemphis Business Journal: Approaching Your Business As If You're an Investorhttp://oaklynconsulting.com/approaching-your-business-as-if-youre-an-investorTue, 01 May 2018 05:00:00 GMTJonathan HoughtonIn his latest column for the Memphis Business Journal, Frank Williamson offers advice to entrepreneurs on how to understand and maximize their company's appeal to potential buyers.Read the original article here.When you build a business from the ground up, it means more to you than dollars and cents. It’s an embodiment of your vision and years of hard work.Moreover, your company is a community; as a business owner, you’re the leader. A time comes when you need to consider a future for your busin...]]>In his latest column for the Memphis Business Journal, Frank Williamson offers advice to entrepreneurs on how to understand and maximize their company's appeal to potential buyers.Read the original article here.When you build a business from the ground up, it means more to you than dollars and cents. It’s an embodiment of your vision and years of hard work.Moreover, your company is a community; as a business owner, you’re the leader. A time comes when you need to consider a future for your busin...In his latest column for the Memphis Business Journal, Frank Williamson offers advice to entrepreneurs on how to understand and maximize their company's appeal to potential buyers.

When you build a business from the ground up, it means more to you than dollars and cents. It’s an embodiment of your vision and years of hard work.

Moreover, your company is a community; as a business owner, you’re the leader. A time comes when you need to consider a future for your business that doesn’t involve you.

While having a strong attachment to your company can give you the motivation to work hard, it can become a roadblock to understanding its appeal to potential buyers.

Investors look at your business as an asset. As you prepare for the possibility of selling your business, the most important thing you can do is adjust your mindset when it comes to decision-making.

Here are some thoughts on how to do that:

1. Take a step back. Seeing your business in context might require you to take a step back from the day-to-day obligation of being responsible to customers: working on your business rather than working in your business.

When working in your business, you constantly respond to the daily needs of customers and employees.

When working on it, you focus on building systems and processes that make it a better business, one that can run without you. That can mean, for instance, making sure you have long-term legal contracts with customers that can be transferred if your business changes hands, or creating standard operating procedures.

Hone in on your business’s biggest risks and mitigate them.

2. Solidify your five-year plan. Business owners, as a rule, don’t have the luxury of thinking too far into the future. Many have a general plan in place for the next few months; many fewer might have thought out the next year or so. And, if they don’t absolutely need to stop and think about these things, they’re probably not going to.

Good investors, on the other hand, are constantly thinking five to seven years into the future. They’re glad to invest their money in a promising business, but only if they think there’s a good chance of a sizeable return.

How are you in a position to persuade an investor to give you money if you don’t know where you’ll be in five years? Impressing investors requires telling a story — but not a fictional one. Nobody can tell the future, but we can create a few plausible scenarios based on the trends today. Then, by testing a business plan across those scenarios, we can see how resilient it is.

3. Tell investors the good and the bad. The biggest thing that makes investors pause is uncertainty. When a risk can’t be quantified, investors get nervous. They never want to hear, “It can’t be estimated.”

Investors aren’t averse to negative facts about a business. But, they do want to know those things up front so they can consider them in context.

Hearing a new piece of bad news late in the process is a big red flag. It comes down to trust — if they’re given reason to believe you’re not being transparent, it can cause them to think about other things they may have forgotten to ask about … and that risk can’t be quantified.

4. It’s all about the numbers. The overarching question for an investor is, “How do I make sure I get my money back?”

Business owners need to consider all the things that will make it easier for investors to see that as a reasonable possibility. How can they feel confident that your history of success will continue? If things go wrong, how bad could it get?

Because we’re dealing with money people, a lot of it comes down to numbers. By nailing down everything within your control, and clearly articulating what the unknowable future could look like (and how risky that version of the future is), you can give your business its best shot at drawing attention from a worthy investor.

]]>http://oaklynconsulting.com/approaching-your-business-as-if-youre-an-investorMidMarket Talk: 6 M&A Lessons That Even Experienced Pros Forget Sometimeshttp://oaklynconsulting.com/6-ma-lessons-that-even-experienced-pros-forget-sometimesMon, 09 Apr 2018 14:00:00 GMTJonathan HoughtonFrank Williamson recently penned an article for the Alliance of M&A Advisors' "MidMarket Talk" newsletter discussing some takeaways from a recent M&A forum he participated in.Read the original article here.Being an M&A advisor is an experience of constant learning. No matter how long I work in this profession — and I’ve been doing it for more than 20 years — I never cease to encounter situations that present unforeseen challenges.I recently participated in a forum with five other exp...]]>Frank Williamson recently penned an article for the Alliance of M&A Advisors' "MidMarket Talk" newsletter discussing some takeaways from a recent M&A forum he participated in.Read the original article here.Being an M&A advisor is an experience of constant learning. No matter how long I work in this profession — and I’ve been doing it for more than 20 years — I never cease to encounter situations that present unforeseen challenges.I recently participated in a forum with five other exp...Frank Williamson recently penned an article for the Alliance of M&A Advisors' "MidMarket Talk" newsletter discussing some takeaways from a recent M&A forum he participated in.

Being an M&A advisor is an experience of constant learning. No matter how long I work in this profession — and I’ve been doing it for more than 20 years — I never cease to encounter situations that present unforeseen challenges.

I recently participated in a forum with five other experienced M&A professionals in which we talked through our experiences of managing risk in the mergers and acquisitions process. By exchanging stories of deals gone wrong, we touched on some common points about the work we do.

We settled on six keywords to sum up the lessons we learned:

Unanimous. Minority owners can cause unexpected problems, holding up a deal from being done despite holding just a small stake in a company. The lesson is to pay attention to all of the crucial stakeholders in a deal. Having unanimity in deciding to move forward is important to managing risk.

Team sport. When investors buy a business, they’re looking at the totality of the business and imagining how it would fit into their existing operation. Because there are different expert perspectives in a business — operations, sales, HR — it is better than not just one person is making a decision. Think about how to reflect the expertise of each important business function as you move forward with a deal. Making important decisions in an M&A function is not a solo activity; it’s a team sport.

Dis-synergies. In thinking about the acquisition of a company, investors are focused on how they can cut costs and increase sales. These are normally called the synergies of a deal. They’re not always easy to achieve. Sometimes it turns out that there are more costs, or more roadblocks and obstacles to additional sales that might cost revenue as a result of the deal. So, it’s important to also consider those so-called “dis-synergies.” Risk management is as important as quantifying the upsides.

Constituents. In a situation where a big customer has the right of first refusal, there is a needle to be threaded. You must decide how to make an offer that is good enough to get the deal done, but not so good that it will cause the big customer to trump the buyer. Think about the impact of the deal on all the constituents to the deal — including owners, customers or employees — and do what you can to maintain important ongoing customer relationships.

Checklist. As you go through the pre-deal due diligence process, it’s important to remember that both the answers you get and the absence of the answers you hoped to get are equally important. At its core, due diligence comes down to working a checklist — listening to where you get information and where there’s silence. Even if you get answers that make sense nine out of 10 times, you need to consider that silence on the 10th question as being as important as the answers you receive. At the end of the process, you need to be able to say you worked through your checklist with discipline and didn’t give somebody a pass.

Cushion. When you’re buying a company, the legal documents you sign always have an insurance policy of some kind built into them, which can be viewed as a form of risk management. This practice provides a cushion in the event that things which should have been learned were not. People need to be conscious on both sides that there’s a reasonable basis for there to be some form of cushion. There’s an insurance policy in there; sometimes you have to use it.

]]>http://oaklynconsulting.com/6-ma-lessons-that-even-experienced-pros-forget-sometimesEDGE Magazine: 5 Actions to Grow Your Business in Today's Economyhttp://oaklynconsulting.com/five-actions-to-grow-your-business-in-todays-economyThu, 05 Apr 2018 05:00:00 GMTJonathan HoughtonFrank Williamson recently contributed a column to the Chattanooga Times Free Press's business magazine, EDGE, offering advice to business owners looking to expand in today's economy. Read the original article here.Our economy is thriving and it has never been a better time to be a small-to-midsize business owner. Here are five action items your business can implement to take advantage of the current economic climate:Sell. ]]>Frank Williamson recently contributed a column to the Chattanooga Times Free Press's business magazine, EDGE, offering advice to business owners looking to expand in today's economy. Read the original article here.Our economy is thriving and it has never been a better time to be a small-to-midsize business owner. Here are five action items your business can implement to take advantage of the current economic climate:Sell. Frank Williamson recently contributed a column to the Chattanooga Times Free Press's business magazine, EDGE, offering advice to business owners looking to expand in today's economy. Read the original article here.

Our economy is thriving and it has never been a better time to be a small-to-midsize business owner. Here are five action items your business can implement to take advantage of the current economic climate:

Sell. Now is the time to be out finding new customers. In my sales training, I learned the importance of paying attention to good sales behavior, attitude and techniques. Behavior means having a systematic approach to each task, or a step-by-step plan for your goals. Stay disciplined and don’t let inevitable roadblocks throw you off course. Attitude is always your choice and how you view yourself, your company, your product or service and the marketplace. Stay as positive as possible! And technique relates to how you apply your various skills and behaviors. Use all three, right now! The saying goes, "make hay while the sun shines."

Think ahead and be strategic about pricing. Yes, it's competitive, but take advantage of demand to raise prices where you can. Build any cushion in your profit margins that the market will let you.

Consider "big" growth ideas. What are the partnerships, strategic relationships, acquisitions or investments that could change your business? Devote time to exploring them. Looking for investors besides a bank? Take advantage of resources that are there -- talk to the Small Business Administration, talk to the local non-profit organizations. The government is out there to help in its own way, too. Don’t ignore it. For example, the public-private partnership Launch Tennessee has an invested interest with the state to help small businesses grow and create more jobs.

Consider what could go wrong. No one can predict the future, and as they say, economists have predicted 50 of the last five recessions. But we can imagine scenarios where things go south. Imagine as many as you can, write them down, estimate what they could mean for your business, and ask yourself, "across these scenarios, is my business resilient?" Make plans to be more resilient when any number of bad things happen.

This year, don't forget to plan for changes in the tax code. The government is your business partner (like it or not), and this partner has just said it wants a smaller cut of the profits. Learn what this really means for you by scheduling a planning meeting with your accountant.

Finally, be opportunity driven, not resource constrained. In our firm, we help people overcome the constraints related to capital. The easiest people to help are the ones who articulate their opportunities best.

]]>http://oaklynconsulting.com/five-actions-to-grow-your-business-in-todays-economySmall Business Today: 4 Questions You Should Ask Before Taking on a Business Partnerhttp://oaklynconsulting.com/4-questions-you-should-ask-before-taking-on-a-business-partnerThu, 08 Mar 2018 06:00:00 GMTJonathan HoughtonOaklyn's Frank Williamson recently wrote this article for Small Business Today magazine. To read the article on the magazine's website, click here.It’s been said that the closest thing to being a king in the United States is owning your own business.You can decide everything you want about your work environment. Though many entrepreneurs might not admit it, there is a certain emotional charge from being the boss.Depending on what you envision for your business’s future, there may ...]]>Oaklyn's Frank Williamson recently wrote this article for Small Business Today magazine. To read the article on the magazine's website, click here.It’s been said that the closest thing to being a king in the United States is owning your own business.You can decide everything you want about your work environment. Though many entrepreneurs might not admit it, there is a certain emotional charge from being the boss.Depending on what you envision for your business’s future, there may ...

Oaklyn's Frank Williamson recently wrote this article for Small Business Today magazine. To read the article on the magazine's website, click here.

It’s been said that the closest thing to being a king in the United States is owning your own business.

You can decide everything you want about your work environment. Though many entrepreneurs might not admit it, there is a certain emotional charge from being the boss.

Depending on what you envision for your business’s future, there may be limits on what you can achieve as a lone entrepreneur, which is why many business owners start to consider taking on a partner. As a business advisor, I provide feedback and assistance to entrepreneurs facing this question.

In my business, the word “partner” often refers to an equity investor, who provides capital in exchange for sharing in future profits. A partner might benefit a business in other ways, bringing previous experience in the industry, connections or even personality.

Two people can achieve more together than alone — if the partnership works. If not, both people will get less done, maybe leading to the failure of the business. A partnership is not something to take lightly.

For business owners wrestling with this decision, it’s worth taking some time to ponder a few questions:

1. Would new capital alone solve your business’s problems?

Small businesses need money to grow. Sometimes they need money to get through a rough patch. But if you find your business in a tenuous cash position, you don’t have to sell a stake of your company.You can sell assets to raise money. You can go to a bank for a loan. And you can look for ways to cut back on costs.

My firm recently worked with a small company that needed capital, but wasn’t able to raise it quickly. In the end, the solution wasn’t to raise more money; it was to spend less.

They made the decision of cutting expenses by half, which meant that they had to let some people go. They also became more efficient about taxes and accelerated payments from clients. Their newfound financial health allows them to decide the timing and pace of future growth.

2. Do you feel paralyzed by your responsibilities?

Even if they start with a clear vision, business owners can reach the limit of their capabilities. Joining forces with an experienced partner can help you picture what good looks like at the next level.

It must be stated, though, that investment banking firms also can bring this advice to the table. Because of their experience working in similar situations, they understand what successful decision-making looks like in a healthy business.

3. Do you know how to unwind the partnership if it stops working?

Before taking such a major step, you should think through a plan for unwinding a partnership should the situation go wrong.

What happens in case of death or divorce? What if one partner wants to sell his or her stake to the other? Although most companies commonly do this through governance documents, these are still good practical questions to revisit from time to time.

4. Will you be unhappy sharing control?

This question requires a business owner to have some self-awareness about their personality. If you like to be in charge, you’re going to have to think hard about how you’ll react to giving up some control.

It’s a very different experience to go from being a company’s sole owner to just one of the owners, where each person has a say. When you have business partners, you’re not just accountable to yourself anymore.

You’ll also reap a smaller percentage of the financial rewards when your business succeeds. If things don’t go well for your company, you may experience pressure from your partner to have a greater say in decision-making. And you may not always share the same vision for the company you founded.

Some business owners may end up deciding that they’ll be better off on their own. But others may see the benefits of joining forces with a second person or a group of investors. Each business owner’s considerations are different, which is why many seek the assistance of an investment banking firm to choose the right option for their individual business.

]]>http://oaklynconsulting.com/4-questions-you-should-ask-before-taking-on-a-business-partnerMemphis Business Journal: Three situations when you may want to sell your businesshttp://oaklynconsulting.com/three-situations-when-you-may-want-to-sell-your-businessWed, 07 Feb 2018 22:55:00 GMTJonathan HoughtonThe prospect of selling one's business isn't something to take lightly. Yet, there are some situations when an offer might merit serious consideration. Oaklyn's Jack Rainer recently wrote an article for the Memphis Business Journal examining three situations when a business owner should pay attention to an offer to sell.Read the original article here.When you own a business, you tend to focus on the here and now. ]]>The prospect of selling one's business isn't something to take lightly. Yet, there are some situations when an offer might merit serious consideration. Oaklyn's Jack Rainer recently wrote an article for the Memphis Business Journal examining three situations when a business owner should pay attention to an offer to sell.Read the original article here.When you own a business, you tend to focus on the here and now. The prospect of selling one's business isn't something to take lightly. Yet, there are some situations when an offer might merit serious consideration. Oaklyn's Jack Rainer recently wrote an article for the Memphis Business Journal examining three situations when a business owner should pay attention to an offer to sell.

When you own a business, you tend to focus on the here and now. You’re focused on managing employees, driving sales, containing costs and planning your next growth opportunity.

Selling your business, if it crosses your mind at all, is a distant, hazy goal, not an immediate consideration.

After all, your business is not just an investment; it’s a community you built. It’s a place where you go to work every day.

And, to some degree, it also represents your personal identity. Too often, a business owner dismisses a good offer due to the magnitude of the decision.

So, when should you really pay attention to an offer for your business? If you’rean owner who has seen profits climb substantially in recent years, it’s wise to be ready in case an investor comes knocking.

To help discern whether to open the door to a new path, here are three situations when a buyout offer might be too good to refuse:

When the deal will allow you to grow more – and earn more – than you ever could alone

Taking some of your money off the table and getting capital to pursue growth and getting an investor with the experience to help you? That might be too good to pass up.

In my role managing mergers and acquisitions, it’s not uncommon to work with an owner who sold most of their business but decided to keep working there because the new owner has the capital and experience to open a clear path to something bigger.

When you could invest the proceeds and reasonably expect to earn more than you could by keeping the business

Running a business is hard work. Margins aren’t always that high, and most business owners do have all their eggs in one basket.

Every few years, it makes sense to stop and consider the changes that could happen in the future — both in your personal and work lives — and how much you’re really likely to earn from running the business.

For some owners, it could make more sense to take a big payout now, while valuations are high and taxes are low. This year could be the time to work with a financial planner to understand the “number” you might need if you wanted to live on investment returns.

When you are tired and your organization lacks a succession plan – and someone is offering to easily solve that problem for you

A common story we hear is, “I am ready to retire, but my children have no interest in the business.”

For most business owners, the legacy of their company and the future of their employees is a crucial consideration. And, they know that not every business will be sold: Competitors are happy to pick off customers until too few are left to operate profitably.

There is peace of mind that comes with selling to someone new and fresh who knows how to tailor the transition smoothly and respectfully to all parties.

It’s important to thoroughly evaluate an offer to make the right decision for you and for those whom would be affected by the deal.

It is wise to raise the red flag when an offer seems too good to be true. But these days, if you thoroughly vet your options, there could truly be an offer you shouldn’t refuse.

]]>http://oaklynconsulting.com/three-situations-when-you-may-want-to-sell-your-businessMergers & Acquisitions: 4 things private equity firms can do when faced with an underperforming investmenthttp://oaklynconsulting.com/4-things-private-equity-firms-can-do-when-faced-with-an-underperforming-investmentFri, 05 Jan 2018 20:30:00 GMTJonathan HoughtonMergers and Acquisitions recently featured an article by Oaklyn's Christopher Wright exploring the various options for private equity firms when they're trying to extract value out of an underperforming investment. Follow this link to read the original article.Businesses fail for any number of reasons. A company could be decades old with a track record of healthy profit margins before taking a sudden downturn; conversely, distressed investments can easily pivot with the proper guidance. Par...]]>Mergers and Acquisitions recently featured an article by Oaklyn's Christopher Wright exploring the various options for private equity firms when they're trying to extract value out of an underperforming investment. Follow this link to read the original article.Businesses fail for any number of reasons. A company could be decades old with a track record of healthy profit margins before taking a sudden downturn; conversely, distressed investments can easily pivot with the proper guidance. Par...Mergers and Acquisitions recently featured an article by Oaklyn's Christopher Wright exploring the various options for private equity firms when they're trying to extract value out of an underperforming investment.

Businesses fail for any number of reasons. A company could be decades old with a track record of healthy profit margins before taking a sudden downturn; conversely, distressed investments can easily pivot with the proper guidance. Particularly when it comes to private equity investments, it seems one thing rarely endures: the status quo. According to the Harvard Business Review, an estimated 70 percent to 90 percent of all acquisitions fail to achieve their anticipated strategic and financial objectives. Fortunately, this doesn’t have to be the case, if you take the necessary steps to align your team and use the data and tools at your disposal. Here are 4 steps that can turn around an underperforming investment:

1. Identify company leaders

Take a look at the company leadership and assess who is onboard with new ownership and wants to move the company forward — and who isn’t. Gather input from those already onboard as well as any detractors, and develop a way forward based on common ground. You’ll need buy-in from everyone, as both investors and management must be in alignment about company objectives for them to have a shot at success. After all, investors only have so much operational capacity. So, build the plan together.

2. Be transparent

Once you have a plan in place, be 100 percent transparent — not just with managers, but with the entire team, if possible. Communication about the company should be straightforward and shared in a supportive, caring environment. Bad news and unpleasant realities are never easy to discuss openly, but it’s necessary to have those difficult conversations so that everyone understands what’s happening at every stage. The whole team needs to understand what’s at stake and common goals must be established before all parties can begin to move in the same direction with the appropriate sense of urgency.

3. Make use of available data

Make sure to track all sales, operational and other key metrics for the company. Investors always enter into an acquisition with a clear investment thesis, but rarely does everything go according to plan. The biggest impediment to outsized returns is time, so if you’ve been tracking the right data all along, you’ll be able to identify problems earlier, allowing you to make any necessary changes to get back on track without losing too much time or going too far down the wrong path.

Even the most logical of investment theses is likely to fail, so don’t be stubborn. If the numbers are telling you to pivot, then pivot. If they’re telling you that customers want something different, change your product. And if they’re telling you that an underperforming investment has turned into a failed investment, unfortunately a tough decision awaits. Let the data bear the brunt of the decision-making burden — when you aren’t operating on your gut alone, it’s much easier to pull the trigger on big, albeit needed, decisions.

4. Do sweat the details

For professional investors to realize the returns they seek, a great deal needs to happen between the point of acquisition and the point of exit. Troubles with integration, management turnover, lackluster sales, or any number of other problems could arise that take the company off course, so pay close attention to budgets and trends and err on the side of action.

If you take the time to align your leadership and let the numbers be your guide, an underperforming investment doesn’t have to remain so. And when available data or team bandwidth are lacking, don’t be afraid to bring in outside counsel for help. Make these four steps a priority and you’ll be well on your way to turning a distressed investment into one that drives outsized returns.

]]>http://oaklynconsulting.com/4-things-private-equity-firms-can-do-when-faced-with-an-underperforming-investment2018 Is Coming. 6 Things to Think About As The New Year Starts.http://oaklynconsulting.com/2018-is-coming-whats-around-the-cornerFri, 15 Dec 2017 06:00:00 GMTFrank WilliamsonAs we close out 2017, it’s obvious that times are awfully good right now. A lot of things are working in the economy. The Dow is hitting new highs. ]]>As we close out 2017, it’s obvious that times are awfully good right now. A lot of things are working in the economy. The Dow is hitting new highs. As we close out 2017, it’s obvious that times are awfully good right now. A lot of things are working in the economy. The Dow is hitting new highs. Unemployment is low. Growth is happening. And policymakers are still pushing for "recovery."

Even the most optimistic of us know better than to coast in good times, though. There are changes that come with growth and momentum, just like there are changes that come with hard times. Regardless of the economic climate, there are always opportunities, risk and inevitabilities.

With this in mind, we are wise to pause and think about what could could come in 2018 or beyond, so as not to be caught off guard. Here are six things to have on your mental checklist for the new year:

1. Suppliers (including current and future employees).

If you’re a business owner, you may be feeling good about your current situation. Your product or service may be in high demand, and you may have more revenue opportunities than you have time to pursue. Is the same thing true for the people and businesses who enable you to serve your clients? Are your suppliers working at full capacity as well? Do potential employees have more career opportunities? Can you count on them continuing to be as true to you as they’ve been in the past? Is it possible that they’ll prioritize new opportunities, raise prices or look for changes in the next year? If so, how will that affect you?

For employees specifically, are you giving them the support they deserve? Is morale good, and if not, how could it be improved?

2. Customers.

Similarly, how satisfied are your customers? Are you serving them with the same level of care you gave them during leaner times? What can you be doing to maintain their loyalty in the coming year? How is your pipeline of new opportunities? How is your pricing and upselling strategy? Do you have a strong enough relationship and sufficient headroom with your clients to pass through increased costs or wages if necessary?

Now is also a worthwhile time to be taking a more wide-scale view of the inevitabilities of life we all face. Benjamin Franklin famously once said that nothing in the world is certain but death and taxes — but we rarely give those things much thought until we’re forced to. This might be a good year to think earlier than that.

3. Death.

If you were to die next year, what would happen to your business? What if your business partner died? Is your business’s organizational structure strong enough that it would continue to operate smoothly in your absence? Is there a buy-sell agreement in place that will help a surviving partner continue in the business? Is the funding in place to handle an eventual passing? Are the owners’ wills consistent with business goals?

4. Taxes.

Though many business owners probably don’t see it this way, the government is, in a sense, a “business partner” that takes a portion of every business’s income to fund public services. And this year, our business partner is changing its priorities. The details aren’t clear yet, but the government seems to be encouraging businesses toward more reinvestment of earnings — which could change how you fund your business, and maybe spur you to consider growth investments in a different way. Whatever the final details turn out to be, this year will be the time to invest energy in tax planning to get the most from our “partnership” with the IRS.

5. Tragedies.

Even in the best times, sad and unexpected things happen. If you or a partner, supplier or key customer suffered a disability or was sidelined by a health condition, how would you respond? If an event 1,000 miles away spooked the markets, would you have a cushion? If the Internet went down, what would your backup plan be? Do you have protection against low-probability, high-impact events? Do you have diversification in your life, savings and business that can help balance the good and bad? Have you written down what worries you, so that you can work these issues with measured emotions?

Finally — at the risk of sounding like a fortune cookie —

6. Opportunities.

What opportunities might lie ahead in the new year? Can we look at past situations and make an educated guess about the future?

“Moneyball” author Michael Lewis recently published a new book, “The Undoing Project,” in which he explores the mental process of our decision-making. His point: although individual events are unpredictable, patterns of behavior tend to be highly predictable.

Although we don’t know exactly what 2018 will hold, we do know that something will happen. So as we say goodbye to 2017 and prepare for new beginnings, my best advice is to keep our eyes open and prepare to take advantage of what’s next.

]]>http://oaklynconsulting.com/2018-is-coming-whats-around-the-cornerMidMarket Talk: How an Hourly Billing Model Helps Us Reach Underserved Clientshttp://oaklynconsulting.com/how-an-hourly-billing-model-helps-us-reach-underserved-clientsWed, 06 Dec 2017 06:00:00 GMTFrank WilliamsonThe Alliance of M&A Advisors' MidMarket Talk newsletter recently featured a column from Frank in which he discussed situations where our hourly billing model helps us serve clients more effectively. Find the original article here or read below.One reason my career as an investment banker appeals to me is because I see how our work directly benefits people and the economy.Like other investment banking firms, my firm assists investor groups and startup-to-middle-market priv...]]>The Alliance of M&A Advisors' MidMarket Talk newsletter recently featured a column from Frank in which he discussed situations where our hourly billing model helps us serve clients more effectively. Find the original article here or read below.One reason my career as an investment banker appeals to me is because I see how our work directly benefits people and the economy.Like other investment banking firms, my firm assists investor groups and startup-to-middle-market priv...The Alliance of M&A Advisors' MidMarket Talk newsletter recently featured a column from Frank in which he discussed situations where our hourly billing model helps us serve clients more effectively. Find the original article here or read below.

One reason my career as an investment banker appeals to me is because I see how our work directly benefits people and the economy.

Unlike many other investment banking firms, though, we choose to charge time-based fees for our services, rather than base our compensation on the more common success-based billing model. We’ve found that this approach allows us to help clients who might otherwise choose to not work with an investment banking firm.

The biggest benefit that I see of billing by the hour is that it frees us from having to usher a deal to completion in order to be compensated — because that’s not always the best way to serve the client. Instead, this structure allows us to function more as a counselor, working alongside clients to help determine their best course of action, which may not include a deal at all. In doing so, we complement lawyers, accountants, investors and traditional investment bankers by handling what doesn't fit neatly for them.

One common situation that we encounter is when a client has been approached by a motivated buyer, so they don’t need to go through the customary auction process. For example, one recent client, a medical practice, had received an unsolicited purchase offer from a private equity-backed roll-up. We helped them determine whether or not to accept the offer by conducting due diligence on the deal, building a financial model for their practice, representing them in negotiations and, most importantly, helping them understand what a fair offer would look like. In the end, the client decided that their independence was more important than the deal, even though the offer was fair. This is a perfect example of a successful outcome that does not include a sale.

Sometimes a client simply needs our help in developing set of options for a major business decision. We recently worked with the founder of a profitable and fast-growing business, who had decided to sell all but a small piece of his company. He wanted to determine the viability of any potential internal or external buyers, and also wanted to know what his team members were looking for out of a possible deal. In addition, we determined how best to split the company and finance a potential transfer, all of which will make the client’s eventual decision as uncomplicated as possible.

For some clients, a successful outcome could involve one of many situations — licensing, a joint-venture deal, an asset sale or a merger. One recent situation we had involved a healthcare software company that had a long sales cycle for their product, which was truly innovative and useful. Their investors were getting antsy and wanted to see signs of progress — either cash returns or break-even cash flow. By developing an investor presentation, we solicited interest from several potential partners that included customers, partners in joint ventures and buyers of the company. The company can choose to move forward with any of these options, all of which would be positive.

One final niche group for which an hourly billing model works is early-stage companies that are seeking help raising investment capital for expansion. These clients usually come to us with most of the background work themselves, and are seeking our help to determine how much money they need and to hone their fundraising presentation. These situations are too small to justify a meaningful transaction fee, but we’re still able to provide useful advice without any future obligations.

]]>http://oaklynconsulting.com/how-an-hourly-billing-model-helps-us-reach-underserved-clientsWho We Helped in 2017http://oaklynconsulting.com/who-we-helped-in-2017Fri, 17 Nov 2017 06:00:00 GMTFrank WilliamsonIn this season of giving thanks, we’d like to extend our gratitude to the entrepreneurs and investors we’ve worked with this past year. Thank you for the strong working relationships we’ve shared and for entrusting us with the big decisions concerning you and your business. We value your vote of confidence.Mergers & Acquisitions ConsultingIT Systems integrator in talks with a Fortune 100 corporationInsurance services company in talks with a publicly-traded insurance brokerReal estate managem...]]>In this season of giving thanks, we’d like to extend our gratitude to the entrepreneurs and investors we’ve worked with this past year. Thank you for the strong working relationships we’ve shared and for entrusting us with the big decisions concerning you and your business. We value your vote of confidence.Mergers & Acquisitions ConsultingIT Systems integrator in talks with a Fortune 100 corporationInsurance services company in talks with a publicly-traded insurance brokerReal estate managem...In this season of giving thanks, we’d like to extend our gratitude to the entrepreneurs and investors we’ve worked with this past year. Thank you for the strong working relationships we’ve shared and for entrusting us with the big decisions concerning you and your business. We value your vote of confidence.

Mergers & Acquisitions Consulting

IT Systems integrator in talks with a Fortune 100 corporation

Insurance services company in talks with a publicly-traded insurance broker

Real estate management company in talks with a real estate investment company

Agricultural company in talks with an economic development investment fund

Industrial services company in talks with a sovereign wealth fund’s platform company

Distribution company evaluating offers from several financial investors

We are grateful to have been able to work this year with clients from a wide range of industries, stages of development and sizes. These companies operate in the technology, financial services, healthcare, real estate, business services and manufacturing/distribution industries; from startup to mature; and from zero to $1 billion in assets.

We got to know these businesses through lawyers, wealth managers, commercial and investment bankers, investors, and prior clients -- all of whom we consider friends.

Happy Thanksgiving 2017.

]]>http://oaklynconsulting.com/who-we-helped-in-2017Small Biz Daily: Managing Investor Relationships With Family and Friendshttp://oaklynconsulting.com/managing-investor-relationships-with-family-and-friendsWed, 01 Nov 2017 17:00:00 GMTJonathan HoughtonFrank recently wrote a column for Small Biz Daily featuring advice for navigating investor relationships with family and friends. Find the original article here or read below.We’ve all heard the advice many times before: Don’t do business with friends and family.The reasons why are obvious. You don’t want to risk damaging close personal relationships because of a misunderstanding over money, or because of philosophical differences in how a business should be run.In spite of this, the m...]]>Frank recently wrote a column for Small Biz Daily featuring advice for navigating investor relationships with family and friends. Find the original article here or read below.We’ve all heard the advice many times before: Don’t do business with friends and family.The reasons why are obvious. You don’t want to risk damaging close personal relationships because of a misunderstanding over money, or because of philosophical differences in how a business should be run.In spite of this, the m...

Frank recently wrote a column for Small Biz Daily featuring advice for navigating investor relationships with family and friends. Find the original article here or read below.

We’ve all heard the advice many times before: Don’t do business with friends and family.

The reasons why are obvious. You don’t want to risk damaging close personal relationships because of a misunderstanding over money, or because of philosophical differences in how a business should be run.

In spite of this, the mixing of personal and business relationships still happens frequently — as I’ve seen firsthand in my career advising business owners. It’s not uncommon that a portion of a fledgling company’s initial funding comes from friends and family, some of whom may never have invested money before.

Sometimes these businesses succeed out of the gate and everybody walks away with a profit. But other times things don’t go as planned, and a company’s original six-month plan is still being reconfigured after a year and a half.

The Securities and Exchange Commission (SEC) mandates that publicly traded companies maintain a respectful level of communication to shareholders. But private businesses aren’t subject to these same legal requirements, which can result in business owners placing less of an emphasis on communication than they should.

Here are the most common problem areas I’ve encountered, and some thoughts on how business owners can address them:

1. Don’t leave investors hanging when times are tough.

Nobody likes to be the bearer of bad news. But, from the investor’s standpoint, it’s even worse to be left out of the loop.

When you’re all hunkered down and working out the logistics of your business’s future, it’s understandable that your focus is temporarily turned away from your investors. But you don’t want to create uncertainty and anxiety among the very people who are providing the lifeblood of your business. So sit down with your loved ones and have an unvarnished conversation with them, even if it’s a tough one to have.

2. Constantly measure yourself against your original set of expectations, and be honest if you’re not measuring up.

From the very outset, be precise with your investors about how and when you expect to repay their money. Your family and friends may be unfamiliar with the specifics of how a business is actually run, so you need to try to explain those concepts as simply as possible. If it becomes clear that you won’t be able to meet your investors’ original expectations, don’t try to construct an alternative narrative that attempts to make the situation sound better than it is.

You need to be candid about your company’s failure to meet its goals, and if your management choices played a part in that, you need to admit those too, together with a plan of how you’ll avoid repeating those mistakes.

3. Always do accurate, complete bookkeeping.

When you run your own business, it’s very easy to underinvest in bookkeeping and other administrative tasks. It’s a pain and it’s expensive, but it is essential.

When family and friends start wondering where their money is, the correct response is not a shrug. You need to be able to demonstrate, though the accuracy and completeness of your records, that you’ve used their money in a respectful, appropriate way. And that goes double if you ever entertain the possibility of going back to them with a pitch for additional capital.

4. Until you repay your investors, it’s their company, not yours.

I’ve encountered entrepreneurs whose businesses are running on other people’s money, but who seem to conveniently forget that fact and start behaving as if that money is theirs.

When other people entrust you with their money, even a small amount, it’s not just a nagging obligation to pay them back. It’s your absolute highest priority.

Investors in general are imminently reasonable, and aware on some level that the road to a successful business is not always a straight line. They’re often willing to give you the benefit of the doubt as long as they feel that you’ve got a strong sense of where you’re headed.

Regardless of whether you have an existing personal relationship with your investors, you need to treat them with respect and maintain an open line of communication. Doing so is smart business — it can minimize possible misunderstandings and engender good will — but on top of that, it’s just the right thing to do.

]]>http://oaklynconsulting.com/managing-investor-relationships-with-family-and-friendsOur Time-Based Billing Approach Helps In These Four Situationshttp://oaklynconsulting.com/four-situationsTue, 24 Oct 2017 05:00:00 GMTjrainer@oaklynconsulting.comJack RainerOur by-the-hour-model allows us act as a counselor, working alongside our clients to help them achieve their objectives. It seems like a little tweak, but the billing model allows us to help in many situations where traditional investment bankers cannot. Here are the stories of a few recent assignments:“One-off deal” - when our client knew who they wanted to negotiate with and they didn’t want to create an auction. ]]>Our by-the-hour-model allows us act as a counselor, working alongside our clients to help them achieve their objectives. It seems like a little tweak, but the billing model allows us to help in many situations where traditional investment bankers cannot. Here are the stories of a few recent assignments:“One-off deal” - when our client knew who they wanted to negotiate with and they didn’t want to create an auction. Our by-the-hour-model allows us act as a counselor, working alongside our clients to help them achieve their objectives. It seems like a little tweak, but the billing model allows us to help in many situations where traditional investment bankers cannot. Here are the stories of a few recent assignments:

“One-off deal” - when our client knew who they wanted to negotiate with and they didn’t want to create an auction. When a physician group came to us, they had received an unsolicited offer for their practice from a private equity backed roll-up. We guided them through the due diligence, built a financial model for their practice, represented them in negotiations and helped them to understand the difference between being compensated as an owner and being compensated as a doctor. Most importantly, we helped them understand what a fair offer would look like. When the offer came back, it was fair, the doctors agreed that it was fair —and then they declined it. In the end, they decided that they valued their autonomy more than the money. In this case, “no deal” was the successful outcome.

“Making a decision” - when our client wanted to assess ‘internal’ and ‘external’ options. One of our clients has built a profitable, fast growing business. He wants to sell most of the company, ideally to his management team, and carve out a small piece to keep for himself. He has to decide on a way to finance it and has to have buy-in from his team. Our first step was to interview the team and find out what they want out of a possible deal. Next we determined how to split the company and how to finance the transfer. Our role has been to work out the details and give everyone involved a straightforward, unambiguous set of options so that the decision is as clear as possible.

“Late in the holding period VC investment” - when multiple scenarios could be success. Recently, we have been working with a healthcare software company. Their software is truly innovative and useful, but their sales cycle is long. Their investors were ready for cash returns or at least breakeven cash flow - either would work. We developed an investor presentation, and ran a version of the traditional sell-side M&A process, soliciting interest in customer relationships, joint-ventures and acquisition of the company. They will be able to work with one or more of theses potential partners to end the cash burn, sell the whole company or both. Any choice might be a successful outcome.

“Early stage” - when the situation is too small for a transaction fee. A start-up financial services company approached us. They had one large investor and needed more money to expand. In the interest of frugality, they wanted to do as much of the capital-raising work as they could themselves. We worked with them to determine just how much money they needed and to establish the most effective case for fundraising. Then we helped them polish their fund-raising material and presentation. They have done most of the nitty-gritty work themselves, only using us to expand their capacity when necessary. Not many investment bankers would or could work this way.

]]>http://oaklynconsulting.com/four-situationsMidlands Anchor: Medical Practice Buyout Offers - To Sell or Not To Sell?http://oaklynconsulting.com/medical-practice-buyout-ofers-to-sell-or-not-to-sellTue, 18 Jul 2017 05:00:00 GMTSeth FalerA recent Physician’s Foundation Survey of 17,000 doctors found that healthcare providers “struggle to maintain morale levels, adapt to changing delivery and payment models, and provide patients with reasonable access to care.” These findings, along with the current uncertainty of U.S. healthcare legislation, indicate that it may be a good time for independent medical office owners to consider an acquisition by a “roll-up” practice or entertain hospital acquisition offers.However enticing a quick...]]>A recent Physician’s Foundation Survey of 17,000 doctors found that healthcare providers “struggle to maintain morale levels, adapt to changing delivery and payment models, and provide patients with reasonable access to care.” These findings, along with the current uncertainty of U.S. healthcare legislation, indicate that it may be a good time for independent medical office owners to consider an acquisition by a “roll-up” practice or entertain hospital acquisition offers.However enticing a quick...A recent Physician’s Foundation Survey of 17,000 doctors found that healthcare providers “struggle to maintain morale levels, adapt to changing delivery and payment models, and provide patients with reasonable access to care.” These findings, along with the current uncertainty of U.S. healthcare legislation, indicate that it may be a good time for independent medical office owners to consider an acquisition by a “roll-up” practice or entertain hospital acquisition offers.

However enticing a quick windfall or business management relief may be, it’s wise to take a step back and thoroughly evaluate if selling your practice is in fact the right decision right now. To start, get in the right mindset and look at your practice as a business, as an investor would see it. Here are three steps when you are approached with an offer to buy your practice:

Get your lawyer involved early. So, you’re being courted by a respected name in healthcare. Maybe a private equity firm has recently acquired several other offices nearby in a roll-up and you are next on their list. Typically the first request from a prospective buyer is for information about your practice, which may be the basis for a written offer. Call your lawyer or other trusted advisor, and ask for a referral to an experienced mergers and acquisitions consultant. After an initial meeting, the consultant should make it easy to organize a response to the suitor’s information request. This means: thoroughly analyze all medical practice financial and operational information in light of what it may communicate to a potential acquirer. Highlight data that might create headlines — including trends, risks and opportunities. Also, be sure to clearly distinguish income provided to “professionals” and “owners” of the practice.

Quantify the possibilities. Dream big and outline the differences — good and bad — among each of the future business scenarios practically available. For example, options could be:

– Sell to a roll-up practice that is actively buying multiple businesses at once

– Sell to a local hospital

– Stay independent

After thoroughly analyzing the data and discussing personal preferences, you can tell a fair practice offer from an unfair one. This also puts all parties on the same page and sets realistic expectations, which in turn increases your team’s comfort level. Additionally, access to all requested data and information levels the playing field between your practice and the suitor.

You have an offer — now what? To quantify the value of an offer, establish and prioritize the criteria by which you judge the value of your practice. This includes but is not limited to: the benefits to you, your family and your partners; mission; taxes (with help from the practice accountant and lawyer); work environment; and patient and employee considerations.

It’s also very tempting to hand over the administrative work associated with regulatory requirements, reimbursement, IT and human resources. But potential drawbacks of selling could include loss of decision-making independence and nimbleness, depending on the new organization or corporate management structure.

As one doctor anonymously commented in the 2016 Physician Foundation’s Survey: “Medicine is not a commodity like soybeans or widgets. Administration needs to be in the business of making it easier, not harder, for clinicians to treat patients.” And if that isn’t a top priority for the potential buyer, owners should decide whether working independently is in itself more valuable than a lucrative buyout offer.

]]>http://oaklynconsulting.com/medical-practice-buyout-ofers-to-sell-or-not-to-sellCFO Magazine: What to Do When Your Boss Sells the Companyhttp://oaklynconsulting.com/what-to-do-when-your-boss-sells-the-companyThu, 06 Jul 2017 05:00:00 GMTFrank WilliamsonThis article originally appeared in CFO magazine. To read the original version, click here.When a company is put up for sale, it creates a uniquely challenging situation for CFOs and other senior executives.At some point in their career, most employees are taken by surprise by a change in their job situation.But when a company is put up for sale, it creates a uniquely challenging situation for CFOs and other senior executives, who may find themselves in the unenviable position of having to ensur...]]>This article originally appeared in CFO magazine. To read the original version, click here.When a company is put up for sale, it creates a uniquely challenging situation for CFOs and other senior executives.At some point in their career, most employees are taken by surprise by a change in their job situation.But when a company is put up for sale, it creates a uniquely challenging situation for CFOs and other senior executives, who may find themselves in the unenviable position of having to ensur...This article originally appeared in CFO magazine. To read the original version, click here.

When a company is put up for sale, it creates a uniquely challenging situation for CFOs and other senior executives.

At some point in their career, most employees are taken by surprise by a change in their job situation.

But when a company is put up for sale, it creates a uniquely challenging situation for CFOs and other senior executives, who may find themselves in the unenviable position of having to ensure the success of a deal that will likely result in the loss of their jobs. During that uncertain and stressful period, they also have to strategize and plan for their next move.

Finalizing a company sale can easily take as long as a year, and through that entire process, senior executives must essentially do two jobs simultaneously:

They need to devote themselves to their current responsibilities at work and, if possible, take on prominent new ones.

They need to start thinking about how they’ll prepare personally for a probable job change.

If you’re a senior executive in a company that is being sold, your emotions regarding the prospect of re-entering the job market may largely depend on your career history. If you’ve made lateral moves between companies in the past, the process of finding a job may be fresh in your mind and won’t seem as intimidating. However, if you’ve devoted your career to a single company and gradually moved up the corporate ladder, you might be somewhat anxious about finding another position with the same level of prestige and compensation.

In my career as a strategic consultant for business owners, I often work closely with senior executives who are grappling with this situation. I’ve observed firsthand which strategies have been effective — and which have not.

Get involved in a big way.

If you find yourself facing the prospect of unemployment, the first and most important thing you can do as a senior executive is to get involved in a very big project at your company, then make sure that you do a great job at it. The benefits of doing this are both personal and professional.

On a personal level, you need to feel comfortable that when the deal closes, you can leave with your head held high. On a professional level, a major new accomplishment serves as a calling card in future job interviews and helps frame your professional story.

Be a team player.

Next, make it clear that you’re still part of the team at your company. Everyone is under pressure to maintain a sense of unity in the face of imminent change, so employee dedication is highly valued. And on a purely selfish level, if you want to share in the monetary benefits of a good deal taking place or get a strong recommendation from your current employer, you have to help this project succeed.

Remember that this a moment in time when you have to consider the interests of other stakeholders above your own. Customers and shareholders come first. After them are the rank-and-file employees who keep the business functioning from day to day. Senior employees are a distant third.

Create a narrative.

As you re-enter the job market, one of the most important things you can do is create a narrative about your career. You’re not just a former member of the team of a particular company; you’re an independent finance professional. And part of that new identity is knowing what skills and experience you have that are transferrable to other companies.

If you’re an industry veteran, don’t view your age as a negative. Many senior-level jobs out there require the combination of practical knowledge and instinct that only seasoned professionals have.

Take a consultative approach.

It’s a common mistake to view potential job interviews as an opportunity to do a hard sell by rattling off your skills and experiences. But I would suggest a different strategy.

As you network and encounter new people who are in a position to offer you a job, take a consultative approach. Listen to what they have to say. Ask about their challenges and their needs. How are they financing their company? How is their organization getting the information to make big decisions? Probe, probe, probe.

As they open up, look for a natural opening to tell your story and explain how you’ve helped someone in a similar situation. Companies are inclined to hire someone who understands their needs and can offer solutions.

Remember that change is inevitable.

Whatever happens in your job search, you have to be clear-eyed about what the options are. You may get a great new job, or, on the other end of the spectrum, you may be entering retirement sooner than you thought.

The good news for most senior executives is that they will have reached an income level where they have a financial reserve to insulate them through a period without income. So embrace the period of transition and make sure that you end up in a place that feels right.

]]>http://oaklynconsulting.com/what-to-do-when-your-boss-sells-the-companyMidlands Anchor: Medical Practice Buyout Offers - To Sell or Not To Sell?http://oaklynconsulting.com/medical-practice-buyout-offers-to-sell-or-not-to-sellTue, 20 Jun 2017 05:00:00 GMTSeth FalerA recent Physician’s Foundation Survey of 17,000 doctors found that healthcare providers “struggle to maintain morale levels, adapt to changing delivery and payment models, and provide patients with reasonable access to care.” These findings, along with the current uncertainty of U.S. healthcare legislation, indicate that it may be a good time for independent medical office owners to consider an acquisition by a “roll-up” practice or entertain hospital acquisition offers. However ...]]>A recent Physician’s Foundation Survey of 17,000 doctors found that healthcare providers “struggle to maintain morale levels, adapt to changing delivery and payment models, and provide patients with reasonable access to care.” These findings, along with the current uncertainty of U.S. healthcare legislation, indicate that it may be a good time for independent medical office owners to consider an acquisition by a “roll-up” practice or entertain hospital acquisition offers. However ...A recent Physician’s FoundationSurveyof 17,000 doctors found that healthcare providers “struggle to maintain morale levels, adapt to changing delivery and payment models, and provide patients with reasonable access to care.” These findings, along with the current uncertainty of U.S. healthcare legislation, indicate that it may be a good time for independent medical office owners to consider an acquisition by a “roll-up” practice or entertain hospital acquisition offers.

However enticing a quick windfall or business management relief may be, it’s wise to take a step back and thoroughly evaluate if selling your practice is, in fact, the right decision right now.

To start, get in the right mindset and look at your practice as abusiness, as an investor would see it. Here are three steps when you are approached with an offer to buy your practice:

Get your lawyer involved early

So, you’re being courted by a respected name in healthcare. Maybe a private equity firm has recently acquired several other offices nearby in a roll-up and you are next on their list. Typically the first request from a prospective buyer is for information about your practice, which may be the basis for a written offer.

Call your lawyer or other trusted advisor, and ask for a referral to an experienced mergers and acquisitions consultant. After an initial meeting, the consultant should make it easy to organize a response to the suitor’s information request.

This means thoroughly analyzing all medical practice financial and operational information in light of what it may communicate to a potential acquirer. Highlight data that might create headlines — including trends, risks, and opportunities.Also, be sure to clearly distinguish income provided to “professionals” and “owners” of the practice.

Quantify the possibilities

Dream big and outline the differences — good and bad — among each of the future business scenarios practically available. For example, options could be:

Sell to a roll-up practice that is actively buying multiple businesses at once

Sell to a local hospital

Stay independent

After thoroughly analyzing the data and discussing personal preferences, you can tell a fair practice offer from an unfair one.

This also puts all parties on the same page and sets realistic expectations, which in turn increases your teams’ comfort level. Additionally, access to all requested data and information levels the playing field between your practice and the suitor.

You have an offer — now what?

To quantify the value of an offer, establish and prioritize the criteria by which you judge the value of your practice. This includes but is not limited to: the benefits to you, your family and your partners; mission; taxes (with help from the practice accountant and lawyer); work environment; and patient and employee considerations.

It’s also very tempting to hand over the administrative work associated with regulatory requirements, reimbursement, IT and human resources. But potential drawbacks of selling could include loss of decision-making independence and nimbleness, depending on the new organization or corporate management structure.

As one doctor anonymously commented in the2016 Physician Foundation’s Survey: “Medicine is not a commodity like soybeans or widgets. Administration needs to be in the business of making it easier, not harder, for clinicians to treat patients.”

And if that isn’t a top priority for the potential buyer, owners should decide whether working independently is in itself more valuable than a lucrative buyout offer.

Seth Faler hasmore than 20 years of experience in financial management, including capital management, insurance, investments and mergers and acquisitions. He is a partner atOaklyn Consulting, a strategy consulting firm with a financial focus. It serves businesses across the Southeast in a range of industries in the financial services and healthcare industries.

]]>http://oaklynconsulting.com/medical-practice-buyout-offers-to-sell-or-not-to-sellAxial Forum: Is Debt or Equity Better for Your Business?http://oaklynconsulting.com/is-debt-or-equity-better-for-your-businessTue, 09 May 2017 05:00:00 GMTfwilliamson@oaklynconsulting.comFrank WilliamsonOur friends at Axial Forum reached out to 4 investment banking professionals for advice to business owners about when debt or equity financing is the right fit. My contribution was that the decision is determined by the type of business relationship a business owner wants with her funder, and it is fundamentally the choice between entering into a contract or a partnership.Other contributors highlighted these points:It depends on a business’s risk tolerance. Some companies may not be able t...]]>Our friends at Axial Forum reached out to 4 investment banking professionals for advice to business owners about when debt or equity financing is the right fit. My contribution was that the decision is determined by the type of business relationship a business owner wants with her funder, and it is fundamentally the choice between entering into a contract or a partnership.Other contributors highlighted these points:It depends on a business’s risk tolerance. Some companies may not be able t...Our friends at Axial Forum reached out to 4 investment banking professionals for advice to business owners about when debt or equity financing is the right fit.

My contribution was that the decision is determined by the type of business relationship a business owner wants with her funder, and it is fundamentally the choice between entering into a contract or a partnership.

Other contributors highlighted these points:

It depends on a business’s risk tolerance. Some companies may not be able to borrow due to past losses, and others may not want a business partner.

It depends on how 'smart' a company is with debt. Some companies may be able to find a lender, but equity investment is still the smarter move.

It depends what a company’s growth plans are and how the capital will be used. Though debt is axiomatically cheaper than equity, both have hidden costs to weigh carefully.

“The decision is, fundamentally, between entering into a contract or a partnership. At one extreme, picture bank debt as a pure contract. In a very detailed and conservative way, a business agrees to borrow money today and pay it back in the future, with a set of requirements that give the bank confidence that they will get their money back almost no matter what. In return, the business gets low-cost financing and little interference with their business.

At the other extreme, an equity investment could be seen as a pure relationship. In a less detailed way, a business agrees to take money in return for the investors having a role in running the business. The equity investors do not have many assurances of getting their money back and they have the hope of sharing in a profitable future. In return, the business gets flexible financing and a partner that will ideally add something to the company’s prospects.”

“There are several questions a business owner has to address before determining which financing method is better:

How predictable is my cash flow?

How much risk can my business tolerate?

Am I ready to take on a partner?

In general, financing with debt is almost always going to be considerably less expensive than equity, but will require consistent cash flow for the repayment of principal and interest.

Typically, an equity provider will demand a return on their investment that will be considerably higher than comparable interest expense. Furthermore, even a minority equity holder will require some say in the running of the business.

There are situations in which raising equity is better, such as with companies that do not have the cash flow to repay the debt over a relatively short period, or in the case of a company that may not be able to raise debt because of historical losses or lacking an established operating history.

Business owners need to be careful about the amount of debt they take on. Many lenders will target leverage ratios, or the percentage mix of debt and equity, to determine if they will provide additional funds. Having too much debt can strain a company’s ability to obtain additional debt at a crucial time or could result in having to divert operating capital towards debt repayment.”

“Business owners need to make a careful calculations between the advantages of taking on debt or selling equity. Folks have to evaluate the relative cost of equity in relation to the expected dilution of the company (in this process) by factoring in their size, growth, and available terms. In cases where owners can’t take on debt or debt would be too expensive, it’s sometimes more appropriate to sell equity if the objective is increased growth.

In other words, the best option (debt or equity) is dependent on market conditions, the company’s sector/stage/growth profile, and the use of funds relative to what other options exist today. Many options for short-term, low-cost debt financing solutions exist to give entrepreneurs extra cash on hand to invest in sales or technology growth. Terms on those financings are determined based on current profitability and/or A/R capacity relative to the size of the financing and the expected risks of defaulting on those terms (EBITDA covenants tied to Term Debt placements, for example).

Some companies are strong debt facility candidates, and are smart to pursue those financing sources (incremental growth without dilution). Other companies may be able to take on debt, but the growth objectives and required investment to realize that growth are much better suited for an equity investment of some kind.”

“There is not one most important factor when making this kind of decision. This is a decision that has multiple economic and other inputs that must be taken into consideration.

Where is the company in its life cycle? Is it an early stage business in a stage of high growth or a mature business? If the business is in a high growth phase, is that growth most likely going to come via acquisition or organic growth? If the business is a mature business, what is the next step in its evolution?

The owner should also ask him or herself: What is the money going to be used for? Cap Ex? R&D? Product extensions? Working capital? Acquisitions?

Remember to take into account the financial and non-financial costs of dealing with the rights various types of investors will expect/demand for their investment. It is axiomatic that debt is cheaper than equity. However, both debt and equity have hidden costs that should be taken into account.”

]]>http://oaklynconsulting.com/is-debt-or-equity-better-for-your-businessMemphis Business Journal: Mergers/Acquisitions Are Not for the Faint of Hearthttp://oaklynconsulting.com/mergersacquisitions-are-not-for-the-faint-of-heartMon, 08 May 2017 05:00:00 GMTfwilliamson@oaklynconsulting.comFrank WilliamsonIt’s easy for CEOs to catch deal fever. The symptom is that good things about a merger or acquisition appear closer than the risks.Our experience is that deal fever can be dangerous unless someone splashes cold water on the person who has it.In May, the Memphis Business Journal published our tips for sobering up people who are considering mergers and acquisitions. They are:Buying a successful business does not mean you are buying success. Be as aware of merging company cultures as you are o...]]>It’s easy for CEOs to catch deal fever. The symptom is that good things about a merger or acquisition appear closer than the risks.Our experience is that deal fever can be dangerous unless someone splashes cold water on the person who has it.In May, the Memphis Business Journal published our tips for sobering up people who are considering mergers and acquisitions. They are:Buying a successful business does not mean you are buying success. Be as aware of merging company cultures as you are o...It’s easy for CEOs to catch deal fever. The symptom is that good things about a merger or acquisition appear closer than the risks.

Our experience is that deal fever can be dangerous unless someone splashes cold water on the person who has it.

In May, the Memphis Business Journal published our tips for sobering up people who are considering mergers and acquisitions. They are:

Buying a successful business does not mean you are buying success.

Be as aware of merging company cultures as you are of combining assets.

Prepare to lose some good employees.

Don’t be afraid of deals. But do be prepared.

Please read the full article below.

Mergers/Acquisitions Are Not for the Faint of Heart

Growth and expansion are part of the natural life cycle of a healthy business. Sometimes that growth comes about organically, through opening a new location or expanding products or services. Other times, merging with or acquiring another business might be the best strategy.

But, there’s no dodging the fact that mergers and acquisitions (M&As) can be extremely risky. Business owners considering such a decision need to be clear-eyed about the potential downsides and challenges.

Perhaps it’s just human nature, but I have encountered business owners who optimistically assume that merging with or acquiring another business will result in double the revenue, double the number of successes and so on.

Such a scenario is possible, but it’s not likely in the short term.

It takes hard work to make an M&A deal flow smoothly. Somebody at your business has to focus on the deal instead of tending to the crucial and primary job of serving clients. And, something has to give when a business isn’t operating at full capacity.

In the meantime, your competitors will be doing everything they can to benefit from any perceived weakness on your end. What better time to be aggressive with sales and try to peel off a customer or two?

It would seem that taking away a competitor by buying that company would be advantageous — in that there will be one fewer company bidding against you for new customers.

But, that doesn’t tell the whole story. In a market where contracts go out to bid, companies are generally required to seek a certain number of bids — five or six is typical.

Despite removing one potential bidder, another will inevitably rise up to take its place, preserving the competitive landscape.

Buying a business doesn’t mean that you’re buying everything that makes it successful, either. It’s not uncommon to lose good employees during an M&A transition period. Some might even decide to go into business themselves, creating a new and motivated competitor.

Other times, the cultures of your companies might not mesh. Two groups of people might think about business differently or have varying levels of energy. And, if you encounter bumps in the road, there tends to be finger-pointing.

Business owners shouldn’t be scared away from going down this path. But, M&A deal decisions are an area where professional consultants can demonstrate their value. An M&A deal is a huge undertaking, especially for a small business owner who is going through the process for the first time. An experienced guide can help navigate pitfalls and make the process go as smoothly as possible.

Saying an M&A is good for your business is like saying open-heart surgery is good for your health. It may be the right and necessary choice, but it’s one that carries plenty of challenges and risks.

You have to do everything you can to lower the risk. Make sure the staff is trained, the room is sterile and the equipment is tested and up to date. Don’t do it in your backyard with a hacksaw.

]]>http://oaklynconsulting.com/mergersacquisitions-are-not-for-the-faint-of-heartBOSS Magazine: How To Do It Right - Transfer of a Family Businesshttp://oaklynconsulting.com/transfer-of-a-family-businessFri, 05 May 2017 05:00:00 GMTFrank WilliamsonFrank's advice on transferring ownership of a family business was featured in the May issue of BOSS Magazine. Find the original article here or read below. How to do it Right: Transfer of a Family Business Many issues arise when considering the transfer of a family business: Timing the transition. ]]>Frank's advice on transferring ownership of a family business was featured in the May issue of BOSS Magazine. Find the original article here or read below. How to do it Right: Transfer of a Family Business Many issues arise when considering the transfer of a family business: Timing the transition. Frank's advice on transferring ownership of a family business was featured in the May issue of BOSS Magazine. Find the original article here or read below.

How to do it Right: Transfer of a Family Business

Many issues arise when considering the transfer of a family business: Timing the transition. Deciding who should succeed you. Could the decision spark family disputes? And how can you ensure everything goes without a hitch?

In truth, the statistics on succession planning are not at all comforting. According to the Family Business Institute, only about 30 percent of family businesses survive the transition from first-to-second-generation ownership, 12 percent to the third and a dismal three percent make it to the fourth generation and beyond.

So, how do you begin to tackle these long odds? Planning – early and strategically – is key.

To succeed, you need to take a step back and first clearly understand and define your succession planning goals. Primary decisions should revolve around how to keep the business running smoothly if anything happens to you.

It’s not unlike running a professional sports team. What happens if you lose a key player? You need to identify a point person who can take your place and get the team back in the game.

However, what if there is no obvious successor? Or what if your preferred individual is uncertain about taking the job? Then what? Hard and sensitive decisions that require considerable time and thought will need to be made about whether to close or sell the business, and what that would mean to employees, family members and customers.

Have you found the perfect fit and are you ready to get to work to solidify continuity of the business, family harmony and job security for employees? Every business is unique so there is no cookie-cutter outline. However, these seven tips will set you, and your future generations, up for success:

1. Start Early – If possible, start laying the groundwork and discussing the options with key stakeholders as early as possible. Reflect on accomplishments and express gratitude for successes. Write them down. Be thankful for all that the company has achieved. Then visualize and commit to long-term, personal and professional benchmarks. And by long-term, think as many years as possible before you’d like to exit. Seven years or more in advance is not too early. In fact, according to a 2015 research report conducted by accounting and advisory firm Baker Tilly and Swinburne University, which surveyed over 2,500 family firms from 55 countries, the most common advice was “start earlier.” The report also indicated that four out of five businesses in the United States are currently not succession-ready.

2. Evaluate Your Successors– Smooth the path now if you want to continue the business within the family. Create constructive relationships. Assess management skills. Find any weaknesses and fill in any gaps now when there is still plenty of time for classes and mentoring. There will be strong emotions and difficult conversations around every corner.

To obtain clarity on these issues, DTN Farm Business Advisors Lance Woodbury suggests committing to an ongoing dialogue throughout the process. The professional mediator with more than 20 years' experience in agriculture and closely-held businesses also suggests enlisting a close friend or family member to be an accountability partner who can motivate you with regular calls, emails and text messages.

This time should be spent evaluating your successor(s). You may find that a multiple owner approach is best. For example, a common family-owned industry is farming and agriculture, where roles are assigned for siblings, parents and other relatives to effectively manage the business. Some family member owners might be hands-on, day-to-day operations supervisors, while others assist with marketing, sales, administration or finance needs.

3. Get Outside Help – Hire an experienced, independent third party to assess the value of your business and assist with mediating the discussion with family members.

According to the U.S. Small Business Administration (SBA), transferring ownership of the family business to a new generation is often quite complicated. Ask your accountant, attorney, investment and insurance professionals about additional tax implications, such as estate and gift taxes, which may arise for both parties.

4. Know Your Type – The type of business you own could also impact the required steps and tax implications of the transfer of ownership. For example, if you operate as a sole proprietorship, you have full control and rights to complete the transfer.

The rules for partnerships, limited liability corporations and corporations require additional actions that are situation-specific. It’s best to ask the experts to advise and guide you through the necessary paperwork and requirements.

5. Put it in Writing – Once the agreed upon structure of the business is identified, create a business ownership agreement. Putting it in writing will help avoid family disputes and keep the daily flow of business operations intact, during the transition and beyond.

6. Mark Your Calendar – Establish training and transfer timetables. This helps to mitigate questions of control and motivates your successor and team to learn the day-to-day ropes and be clear about roles and responsibilities going forward. It also allows you to slowly empower the new regime to make decisions, with the added benefit of taking the weight off your shoulders in a systematic, transparent way.

7. Prepare for Retirement – It’s not all about money. Also think about what will keep you energized and content after your formal business life comes to an end. It’s a new beginning. Will you spend time traveling? Doing community service? Or simply playing golf in the sun? Or do you have another idea for a completely different business venture? Whatever your plan is, it’s important to have that outline in place before you take the leap.

There will be bumps in the road, but don’t get discouraged. Many companies have been around for hundreds of years and are still going strong. I’m proud that my family's farm in South Carolina is an example. It's been owned and operated continuously by family members for over 240 years. My father still runs the day-to-day, and right now, we are planning the transfer to another generation.

Remember, businesses owners that make transparency and planning top priorities are setting themselves up for success and fewer headaches down the line, as well as the pride of seeing their company flourish into the next generation.

]]>http://oaklynconsulting.com/transfer-of-a-family-businessHow Oaklyn Consulting Worked with Physicians Toward an M&A Solution - Or Nothttp://oaklynconsulting.com/how-oaklyn-consulting-worked-with-physicians-toward-an-ma-solution-or-notTue, 25 Apr 2017 05:00:00 GMTsfaler@oaklynconsulting.comSeth FalerWe pride ourselves on helping clients reach a ‘no-deal’ solution when it’s right for them. That was the result of our recent work with a family medicine practice. Here’s the story in 5 steps: A practice was approached by a ‘roll-up’ practice which had recently acquired several similar doctor offices. ]]>We pride ourselves on helping clients reach a ‘no-deal’ solution when it’s right for them. That was the result of our recent work with a family medicine practice. Here’s the story in 5 steps: A practice was approached by a ‘roll-up’ practice which had recently acquired several similar doctor offices. We pride ourselves on helping clients reach a ‘no-deal’ solution when it’s right for them. That was the result of our recent work with a family medicine practice. Here’s the story in 5 steps:

A practice was approached by a ‘roll-up’ practice which had recently acquired several similar doctor offices.

After an initial conversation, the doctors and their lawyer asked us to help them organize their response to an information request that would lead to an offer to buy the practice.

To help the doctors understand what they would be communicating to the potential acquirer, we gathered and analyzed all the financial and operational information requested by their suitor. And we did this with the information:

Showed the doctors what their practice would look like to a financially-minded acquiring practice.

Highlighted for the doctors how to distinguish their income as ‘professionals’ and as ‘owners’ of their practice.

Quantified the differences -- good and bad -- among each of the business scenarios practically available to them. In this case, the options were (1) sell to the roll-up practice; (2) sell to the local hospital; and (3) stay independent. This way, the doctors could tell a fair offer for their practice from an unfair one.

We packaged and sent the information to the suitor, and while they were digesting the information, we engaged the doctors in a conversation about how they would make a decision when an offer came back. We discussed all the possible criteria for determining the future of their practice -- individual needs, family needs, group needs, reputation, mission, taxes (with help from the practice accountant and lawyer), work environment, employees, each doctor’s health and productivity, etc.

An offer came back from the suitor. It was fair -- the financially-minded suitor thought so, we thought so, and the partners in the practice thought so. The doctors considered this offer and their other options. The doctors’ conclusion: “In light of this being a fair offer, we value our autonomy more than the money. We pass on the deal and want to stay independent.”

We helped the client better understand:

The practice as a business, as an investor would see it.

The strategic business choices available to them.

How the partners might make a decision together about the future of the practice.

How to consider all the relevant criteria, without pressure to do a deal or sell out.

If this story seems relevant to someone you know, please call.

]]>http://oaklynconsulting.com/how-oaklyn-consulting-worked-with-physicians-toward-an-ma-solution-or-notHelp When We Needed Ithttp://oaklynconsulting.com/help-when-we-needed-itFri, 21 Apr 2017 05:00:00 GMTfwilliamson@oaklynconsulting.comFrank WilliamsonOne of OC's first assignments was referred by an investment bank. A group of veteran healthcare executives wanted to build a services roll-up. Naturally, they needed a platform acquisition on one side of this plan, and a financial sponsor on the other. ]]>One of OC's first assignments was referred by an investment bank. A group of veteran healthcare executives wanted to build a services roll-up. Naturally, they needed a platform acquisition on one side of this plan, and a financial sponsor on the other. One of OC's first assignments was referred by an investment bank. A group of veteran healthcare executives wanted to build a services roll-up. Naturally, they needed a platform acquisition on one side of this plan, and a financial sponsor on the other.

The issue: they didn't know the investor market.

Investment bankers get theses kinds of calls, but orienting people to the investment market isn't what they do. What investment bankers do is connect established businesses run by experienced managers with the most interested investors, ideally to deploy substantial amounts of capital at reasonable risk-adjusted returns.

So there's the gap: how to help talented managers get the relevant experience with the investment community for the first time?

In this case, we filled the gap. The management team hired us for a limited assignment in which we helped them:

Orient their presentation to investors, passing Private Equity 101.

Make introductions to a small number of low probability investor prospects (for practice) and higher probability prospects (for education and networking), and join them in meetings.

Develop and research a list of potential investor contacts.

Prepare for investor calls and hear context as they simultaneously networked into the investor community and pursued acquisition targets

After supporting the team for the agreed amount of time, we ended the consulting relationship. I felt pleased about the review of our work a few months later: "You helped us when we needed you."

Sometimes small projects can make a big difference.

]]>http://oaklynconsulting.com/help-when-we-needed-itPolicy Uncertainty and Its Effect on Healthcare Transactionshttp://oaklynconsulting.com/policy-uncertainty-and-its-effect-on-healthcare-transactionsThu, 20 Apr 2017 05:00:00 GMTcwright@oaklynconsulting.comChris WrightFor the last six months Oaklyn Consulting has seen an uptick in healthcare activity. We’ve worked with providers, payors, and healthcare services and technology companies on engagements of varying size and scope. However, our increase in healthcare business seems to run contrary to the market as a whole. ]]>For the last six months Oaklyn Consulting has seen an uptick in healthcare activity. We’ve worked with providers, payors, and healthcare services and technology companies on engagements of varying size and scope. However, our increase in healthcare business seems to run contrary to the market as a whole. For the last six months Oaklyn Consulting has seen an uptick in healthcare activity. We’ve worked with providers, payors, and healthcare services and technology companies on engagements of varying size and scope. However, our increase in healthcare business seems to run contrary to the market as a whole.

In recent conversations with healthcare companies, professional services providers and investment funds, we’ve heard the consistent comment that transactions in healthcare over the past six months have noticeably declined. Interestingly, only about 50% of the funds we’ve met with agree with this trend, but we believe this is still substantial enough to confirm a market movement.

While there are several reasons why healthcare deal flow could be declining, including fear of a market correction and investors’ shared push toward investing in higher quality assets, there’s only one plausible explanation for this abrupt market adjustment in recent months: companies are concerned about the implications of the proposed changes in healthcare policy.

This should come as no surprise. In fact, if you look back to periods immediately following an election in which the prevailing candidate campaigned on fundamentally changing a regulated industry, you’ll find a consistent occurrence. Participants in that market tend to pull back, become more conservative, and put strategic plans on hold while they wait to see what changes actually transpire.

It seems counter-intuitive, and yes, there are those companies that listen to political commentary and are compelled to seek a quick transaction in fear of what’s coming. But the most common response has been to freeze.

This is an effect which in most cases is unwarranted – especially in the healthcare industry today. The realities are these: the healthcare industry is, and for the foreseeable future will be, the largest segment of our economy; the need for high quality care and technologies and services that make healthcare more efficient, affordable, and improve outcomes will never go away; and a President’s bark will always be louder than Congress’s bite.

Of course any change in healthcare legislation will bring its own set of challenges, and for some companies, the writing is on the wall. But it is our view that almost every fundamentally strong healthcare company today will remain fundamentally strong regardless of how the dust settles in DC, and likewise, the correct strategic plan for a business six months ago is likely still the best course of action today.

]]>http://oaklynconsulting.com/policy-uncertainty-and-its-effect-on-healthcare-transactionsMidlands Anchor: Why You Shouldn’t Accept a Private Equity Firm’s Offer to Buy Your Businesshttp://oaklynconsulting.com/why-you-shouldnt-accept-a-private-equity-firms-offer-to-buy-your-businessWed, 05 Apr 2017 05:00:00 GMTfwilliamson@oaklynconsulting.comFrank WilliamsonOn April 5, Midlands Anchor published Frank's article on why you should respectfully decline an offer for your company. You went into business because you believed in offering great choices for yourself, your clients and your employees; a sale should further that value. Here are a few reasons why 'no deal' can sometimes be the best strategy. To read more, follow this link to the Midlands Anchor article or download the attachment.OC- Midlands Anchor - Why You Shouldnt Accept a Pri...]]>On April 5, Midlands Anchor published Frank's article on why you should respectfully decline an offer for your company. You went into business because you believed in offering great choices for yourself, your clients and your employees; a sale should further that value. Here are a few reasons why 'no deal' can sometimes be the best strategy. To read more, follow this link to the Midlands Anchor article or download the attachment.OC- Midlands Anchor - Why You Shouldnt Accept a Pri...On April 5, Midlands Anchor published Frank's article on why you should respectfully decline an offer for your company.

You went into business because you believed in offering great choices for yourself, your clients and your employees; a sale should further that value. Here are a few reasons why 'no deal' can sometimes be the best strategy.

]]>http://oaklynconsulting.com/why-you-shouldnt-accept-a-private-equity-firms-offer-to-buy-your-businessOaklyn Consulting Adds Two Seasoned Business and Finance Professionalshttp://oaklynconsulting.com/oaklyn-consulting-adds-two-seasoned-business-and-finance-professionalsThu, 16 Mar 2017 15:00:00 GMTFrank WilliamsonCHATTANOOGA, Tenn., March 16, 2017 — Oaklyn Consulting, a business financial strategy firm, announced today that Jack Rainer and Chris Wright have joined the firm.In their roles at Oaklyn Consulting, Rainer and Wright will help business owners use financial analysis to navigate strategic issues and challenges. Those challenges might include responding to an offer to buy the company, determining why and how to pursue growth funding or how to transition management within the business. They will al...]]>CHATTANOOGA, Tenn., March 16, 2017 — Oaklyn Consulting, a business financial strategy firm, announced today that Jack Rainer and Chris Wright have joined the firm.In their roles at Oaklyn Consulting, Rainer and Wright will help business owners use financial analysis to navigate strategic issues and challenges. Those challenges might include responding to an offer to buy the company, determining why and how to pursue growth funding or how to transition management within the business. They will al...CHATTANOOGA, Tenn., March 16, 2017 — Oaklyn Consulting, a business financial strategy firm, announced today that Jack Rainer and Chris Wright have joined the firm.

In their roles at Oaklyn Consulting, Rainer and Wright will help business owners use financial analysis to navigate strategic issues and challenges. Those challenges might include responding to an offer to buy the company, determining why and how to pursue growth funding or how to transition management within the business. They will also help the firm serve other business professionals, such as lawyers, financial planners, bankers, non-bank lenders, accountants, and tax credit specialists. Their clients occasionally have projects requiring additional business strategy, corporate finance or financing expertise.

“I am pleased that Chris and Jack are joining Oaklyn Consulting,” said Frank Williamson, founder of the consulting firm. “Chris’s experience in executive recruiting, private equity, and owning a business have provided him a keen sense of ‘what good looks like’ when companies are approaching investors. Jack’s experience as an equity sales trader provided him with very good sales and client services habits, which will help us be more responsive to business owners and professionals needing our help.”

Wright, most recently, was the founder of Foci Cognitive Training, a healthcare services company. He previously worked in business development for New Capital Partners, a private equity firm with offices in Birmingham and Dallas, as well as RLR Partners, an executive search firm serving Fortune 500 companies. Wright received his bachelor’s degree from Yale University and a master’s in business administration from the University of Chicago Booth School of Business.

Rainer, most recently, was a recruiter with Career Personnel Service, Inc. and previously worked as an institutional equity trader at Morgan Keegan & Co. in Memphis. He received a bachelor’s degree from Auburn University and a master’s in business administration from Vanderbilt University’s Owen Graduate School of Management.

Oaklyn Consulting was founded in 2016 to help small and mid-sized companies with thoughtful merger, acquisition and capital-raising advice, especially when transaction options are risky or business owners and investors are still deciding whether a financing transaction is their best choice. Oaklyn Consulting serves businesses across a range of industries, primarily in the Southeastern US.

]]>http://oaklynconsulting.com/oaklyn-consulting-adds-two-seasoned-business-and-finance-professionalsMarket Color: Middle Market Valuations 2016http://oaklynconsulting.com/market-color-middle-market-valuations-2016Wed, 15 Mar 2017 17:00:00 GMTFrank WilliamsonOur friends at GF Data® produce unusually good information about how private companies are valued in M&A transactions. For 2016, a few headlines from their analysis and a round-table meeting of M&A lawyers and investment bankers this week in Atlanta are:Record high valuations for companies $10-250 million in enterprise value. 6.9x EBITDA.High valuations were achieved by very well performing companies. ]]>Our friends at GF Data® produce unusually good information about how private companies are valued in M&A transactions. For 2016, a few headlines from their analysis and a round-table meeting of M&A lawyers and investment bankers this week in Atlanta are:Record high valuations for companies $10-250 million in enterprise value. 6.9x EBITDA.High valuations were achieved by very well performing companies. Our friends at GF Data® produce unusually good information about how private companies are valued in M&A transactions. For 2016, a few headlines from their analysis and a round-table meeting of M&A lawyers and investment bankers this week in Atlanta are:

Record high valuations for companies $10-250 million in enterprise value. 6.9x EBITDA.

High valuations were achieved by very well performing companies. In fact, you could speculate that only the best managed companies with the cleanest financial statements and risk profiles are getting transactions done. With high prices goes investor low risk tolerance. (1)

Even for companies that can get deals done, the size premium is significant. The average EBITDA multiple in 2016 for companies valued at $100-250 million was 9.0x. For companies valued at less than $50 million, it was less than 6.5x. Another indicator that high prices go with low risk tolerance. (2)

(1) To be specific, GF Data defines better financial performers as businesses with trailing 12 months EBITDA margins and revenue growth rates both above 10%, or one above 12% and the other metric at least 8%.

]]>http://oaklynconsulting.com/market-color-middle-market-valuations-2016Market Color: Financial Advisory Firmshttp://oaklynconsulting.com/market-color-financial-advisory-firmsWed, 01 Mar 2017 18:00:00 GMTinfo@oaklynconsulting.comJack RainerWe've been talking lately with brokerage and financial advisory firms about their strategic plans. The number one concern is the DOL's Fiduciary Rule and its impact on their businesses over the next few years. The rule itself is on hold, but many brokerages have already made the decision about how they will conduct business going forward, even if they haven’t stated it publicly. ]]>We've been talking lately with brokerage and financial advisory firms about their strategic plans. The number one concern is the DOL's Fiduciary Rule and its impact on their businesses over the next few years. The rule itself is on hold, but many brokerages have already made the decision about how they will conduct business going forward, even if they haven’t stated it publicly. We've been talking lately with brokerage and financial advisory firms about their strategic plans. The number one concern is the DOL's Fiduciary Rule and its impact on their businesses over the next few years. The rule itself is on hold, but many brokerages have already made the decision about how they will conduct business going forward, even if they haven’t stated it publicly.

The effect for independent advisory firms planning their futures -- succession, continuation, liquidity -- has been to splinter the market.

Many large and medium-sized firms are now looking to acquire independent brokerages and advisors, but everyone we talk to is approaching acquisitions strategically, based on strict geographic needs and on how they want their business model to look in the coming years.

A minority of firms have already made a private, if not public, decision to move fully to an advisory model and they are hungry for RIAs. Advisors with substantial assets that already fit their model -- that is, are already operating as fee-based advisors -- are especially interesting to them.

The majority of acquiring firms haven't gone this far, but they are looking to build assets selectively, based on specific plans to transform their books of business or geographic footprints.

Our take is:

Acquiring firms have their own particular needs and strategies for a changing market. Growth plans are more varied than in the past.

There are potential suitors for most independent firms, but you'll have to look harder for the right fit. A comprehensive approach will make a difference.

To maximize upfront economics and ensure a rewarding work environment, financial advisors planning for the future need to invest more in networking, listening, systematic evaluation of your own businesses and careful, tailored presentation. Using a headhunter to cold call on your behalf isn't enough in today's market.

Please call us for stories and background detail.

]]>http://oaklynconsulting.com/market-color-financial-advisory-firmsStartup Southerner: Talent Management Tips for a Merger or Acquisitionhttp://oaklynconsulting.com/talent-management-tips-for-a-merger-or-acquisitionWed, 15 Feb 2017 18:00:00 GMTFrank WilliamsonOur experience is that employee communications is just as important as deal negotiations in many mergers. In February, Startup Southerner published our tips for business owners planning merger integration and concerned about employee communications. In short, be clear, current and candid. ]]>Our experience is that employee communications is just as important as deal negotiations in many mergers. In February, Startup Southerner published our tips for business owners planning merger integration and concerned about employee communications. In short, be clear, current and candid. Our experience is that employee communications is just as important as deal negotiations in many mergers. In February, Startup Southerner published our tips for business owners planning merger integration and concerned about employee communications. In short, be clear, current and candid. The errors of over-communication (often imperfect expectations) tend to be simpler to solve than the errors of under-communication (rumors and hurt feelings).

]]>http://oaklynconsulting.com/talent-management-tips-for-a-merger-or-acquisitionNelson Mullins' Rhys Wilson - "How To Prepare Your Business for Sale"http://oaklynconsulting.com/nelson-mullins-rhys-wilson-how-to-prepare-your-business-for-saleTue, 24 Jan 2017 06:00:00 GMTFrank WilliamsonIn December, Nelson Mullins lawyer Rhys Wilson wrote a very good article for Industry Today about how to prepare a business for sale. I liked both the content of his points and the order that he addressed them:1st - Know your minimum sales price. Not second, not later, not based on what the market says. ]]>In December, Nelson Mullins lawyer Rhys Wilson wrote a very good article for Industry Today about how to prepare a business for sale. I liked both the content of his points and the order that he addressed them:1st - Know your minimum sales price. Not second, not later, not based on what the market says. In December, Nelson Mullins lawyer Rhys Wilson wrote a very good article for Industry Today about how to prepare a business for sale. I liked both the content of his points and the order that he addressed them:

1st - Know your minimum sales price. Not second, not later, not based on what the market says. Do this first. In the article, Rhys explains the complexity of reaching a solid number. A thoughtful financial planner will identify things most of us would never think of.

For this blog post, I want to focus on conviction. Choosing a minimum sales price you believe in will anchor you during whatever decisions come next.

2nd - Know the value of your business. Rhys makes the point that this doesn't have to be a formal valuation. Second, not first, get an estimate from a M&A advisor (investment banker, business broker or consultant like Oaklyn Consulting) about where companies like yours might trade, so that you can compare your 'minimum sales price' with a 'possible sales price' and start to quantify your 'deal' and 'no deal' options.

3rd - Reduce risk = Increase value. In other words, start to change the value of the business by fixing the things that keep a business from being a market-ready asset. Most private businesses are not managed to be sold on any given day, and making a business market-ready takes time. Rhys's article includes some important headlines, and introductory conversations with thoughtful lawyers, accountants, M&A advisors can add helpful insight.

My recommendation: work through these steps with advisors who have your best interests in mind, will not push you into a deal, and will help you identify and quantify all your options.

]]>http://oaklynconsulting.com/nelson-mullins-rhys-wilson-how-to-prepare-your-business-for-saleSmall Business Daily: Acquisition or Expansion As the Best Route to Growthhttp://oaklynconsulting.com/small-biz-daily-choosing-between-acquisition-or-expansionSat, 21 Jan 2017 06:00:00 GMTFrank WilliamsonCompanies that ask our advice are often seeking funding to grow. Sometimes by acquisition, sometimes expansion.Both options are viable and both can be risky. Acquisition-driven growth can be fast, and complex. ]]>Companies that ask our advice are often seeking funding to grow. Sometimes by acquisition, sometimes expansion.Both options are viable and both can be risky. Acquisition-driven growth can be fast, and complex. Companies that ask our advice are often seeking funding to grow. Sometimes by acquisition, sometimes expansion.

Both options are viable and both can be risky. Acquisition-driven growth can be fast, and complex. In the article linked here from Small Biz Daily, we lay out some things for business owners to consider as they weigh their options.

Big takeaway: Remember that you're buying another entire company, with all the wrinkles of the one you're currently running. Smoothing the wrinkles is a big job; probably rewarding, but definitely work.

]]>http://oaklynconsulting.com/small-biz-daily-choosing-between-acquisition-or-expansionMidlands Anchor: What Makes an Entrepreneurial Ecosystemhttp://oaklynconsulting.com/midlands-anchor-what-makes-an-entrepreneurial-ecosystemTue, 17 Jan 2017 06:00:00 GMTFrank WilliamsonIt's hard to build a business in isolation. The impact of industry clusters is significant, and businesses grow when communities support them.A good example is the expansion of TCube Solutions in Columbia, SC: founder got experience in a big company in the industry in Columbia and became executive at an offshoot company; this business was incubated at the University of SC; public support funded specialized training programs for employees; and in 3 years, TCube has grown to 100 employees in C...]]>It's hard to build a business in isolation. The impact of industry clusters is significant, and businesses grow when communities support them.A good example is the expansion of TCube Solutions in Columbia, SC: founder got experience in a big company in the industry in Columbia and became executive at an offshoot company; this business was incubated at the University of SC; public support funded specialized training programs for employees; and in 3 years, TCube has grown to 100 employees in C...It's hard to build a business in isolation. The impact of industry clusters is significant, and businesses grow when communities support them.

A good example is the expansion of TCube Solutions in Columbia, SC: founder got experience in a big company in the industry in Columbia and became executive at an offshoot company; this business was incubated at the University of SC; public support funded specialized training programs for employees; and in 3 years, TCube has grown to 100 employees in Columbia, announcing 100 more.

Because of the innovation they foster, entrepreneurs improve the way we live and work, not to mention how theyboost the economy by creating jobs. However, to reap these bene ts, there must be an ef cient ecosystem to supportand sustain entrepreneurial efforts.

TCube Solutions’ recent announcement of investing $1.7 million to expand and provide an additional 100 jobs in Columbia is an excellent example of Columbia’s high functioning entrepreneurial ecosystem.

Let’s consider what makes a functional entrepreneurial ecosystem.

Alignment between local academic and business communities

There is often a disconnect between the academic community – where ideas and research come from – and the business community – where that intellectual property is brought to market. The business community must collaborate with local universities and colleges to build upon and curate additional ideas.

Once those ideas hit the marketplace, jobs are created, the local economy is improved and the area’s overall entrepreneurial spirit is supported. Supporting the entrepreneurial spirit leads to more creative ideas that can feedback into the academic vessel, and the process begins again. Indeed, this self-sustaining loop of ideas, to action, and back to ideas is why it’s called an ecosystem.

TCube was founded with the assistance of the University of South Carolina Technology Incubator program. Specialized educational programs from USC and Midlands Tech also played a key role in TCube Solution’s success, according to CEO Sam McGuckin. TCube is an excellent example of what can happen when academic and business communities work together.

Support of local leaders

Local government officials can foster an entrepreneurial community by providing entrepreneurs with the resources and tools that make it easier to transform ideas into jobs. Local leaders can also encourage and help establishworking relationships between academic and business communities, as well as encourage educational programs thatcreate the talent pool essential to a business’s success.

This is also happening in Columbia, where both city and county governments are committed to building and maintaining an environment that supports entrepreneurs. For example, the Business in Motion program, a joint effort between the city and the chamber of commerce, works closely with local businesses to ensure they have the resources and services they need to grow. These kinds of public/private partnerships have played an important role in establishing and sustaining a vibrant entrepreneurial spirit in the area.

A functioning ecosystem is not just a collection of resources that entrepreneurs need – it is a self-sustaining cycle in which success in one area provides the fuel for success in another part of the system. That success feeds back into another part of the system, and the cycle begins anew. Columbia and Richland County are ahead of many other areas of the nation in creating this kind of support system – and the TCube announcement is proof this commitment is paying dividends.

]]>http://oaklynconsulting.com/midlands-anchor-what-makes-an-entrepreneurial-ecosystemCan Your Startup Generate Venture Scale Returns? Check the Math.http://oaklynconsulting.com/can-your-startup-generate-venture-scale-returnsFri, 30 Dec 2016 06:00:00 GMTFrank WilliamsonMy good friend Elizabeth Clarkson at Sapphire Ventures spots the best articles. This one, by a partner at JME Venture Capital, shows one way for company founders to see their businesses through investors' eyes.I've summarized the article here, so the post is longer than usual.Remember the business investors are in - getting their money back plus a risk-adjusted return that makes sense measured against the size of their fund.This is just math. The author highlights these rules of thumb:An early-s...]]>My good friend Elizabeth Clarkson at Sapphire Ventures spots the best articles. This one, by a partner at JME Venture Capital, shows one way for company founders to see their businesses through investors' eyes.I've summarized the article here, so the post is longer than usual.Remember the business investors are in - getting their money back plus a risk-adjusted return that makes sense measured against the size of their fund.This is just math. The author highlights these rules of thumb:An early-s...My good friend Elizabeth Clarkson at Sapphire Ventures spots the best articles. This one, by a partner at JME Venture Capital, shows one way for company founders to see their businesses through investors' eyes.

I've summarized the article here, so the post is longer than usual.

Remember the business investors are in - getting their money back plus a risk-adjusted return that makes sense measured against the size of their fund.

This is just math. The author highlights these rules of thumb:

An early-stage venture fund is going to invest in 20 companies

To achieve a 2x cash-on-cash return and 15-25% IRR for limited partners, the fund aims to get a 3x gross return (before fees) across all its investments

Crunching these numbers, each "meaningful exit" must generate 1/3 of the original amount of the fund. In other words, if a $50m fund must generate $150m overall, each investment (averaging $2.5m) must have the potential to generate $17m in 5-7 years.

A founder/business owner can use the math to back into enterprise value targets that investors will be thinking about as they assess investments.

The author assumes that an investor is going to construct a 20% ownership in a successful company over time (not an easy task).

So, for a $50m fund, an investment must generate at least $17m in returns to be considered meaningful, with a 20% ownership position for the VC at the time of the exit, implying that the company has to be sold for at least $83m. (If the VC had only 10% of the company instead of 20%, the company had to sell for $167mm instead of $83 just to be meaningful.)

The enterprise value target and valuation multiple at exit lead to a revenue target. Gross margin and growth rate are some of the most important factors to determine the valuation multiple.

As examples, the author assumes (a) no debt, (b) the same growth rates and (c) these basic gross margin and valuation metrics:- A SaaS company with 75% gross margin can be sold for 5x ARR- A marketplace company with 15% take rate can be sold for 1x the last twelve months (LTM) gross merchandise value (GMV)- An e-commerce company with 30% gross margin can be sold for 2x the LTM revenues

Now that we know the size of the exits we need (e.g. $83m for the $50m) and the expected revenue multiples for different business models (e.g. 5x ARR for SaaS), we can determine the revenue targets for the different combinations of them: - a SaaS company has to be able to generate $17m in ARR in 5–7 years - a marketplace company, $83m in GMV - an ecommerce business, $42m in revenue

So, as a business owner, can you grow fast enough to become a meaningful exit for this kind of investor? Continuing the example of the $50m fund and the SaaS company:

Consider that some of the best SaaS companies have followed an annual growth rate of T2D3 (triple, triple, double, double, double). This means that, if current ARR is $200k ($17k MRR) and this revenue trajectory is achieved, the company reaches ~$14m ARR and might be a meaningful exit for the VC.

Then consider sales & marketing costs and other expenses required to achieve this goal, and assess whether the overall picture is achievable.

The takeaway: Different investors have different parameters. Make some assumptions and do the math to estimate exit requirements of investors you might want to target. Focus on those whose requirements you can achieve.

]]>http://oaklynconsulting.com/can-your-startup-generate-venture-scale-returnsWho We Helped in 2016http://oaklynconsulting.com/who-we-helped-in-2016Tue, 13 Dec 2016 17:00:00 GMTFrank WilliamsonAs the holiday season arrives, Oaklyn Consulting is 6 months old. The firm was founded on the idea that we could help more business owners considering mergers, acquisitions or fund-raising in a way that “just don’t do it” stayed on the table as an option.We are responding to a need among small and mid-sized businesses for 'investment banking' advice delivered as 'consulting' rather than 'brokerage', with everyone aligned around making the best decision r...]]>As the holiday season arrives, Oaklyn Consulting is 6 months old. The firm was founded on the idea that we could help more business owners considering mergers, acquisitions or fund-raising in a way that “just don’t do it” stayed on the table as an option.We are responding to a need among small and mid-sized businesses for 'investment banking' advice delivered as 'consulting' rather than 'brokerage', with everyone aligned around making the best decision r...As the holiday season arrives, Oaklyn Consulting is 6 months old. The firm was founded on the idea that we could help more business owners considering mergers, acquisitions or fund-raising in a way that “just don’t do it” stayed on the table as an option.

We are responding to a need among small and mid-sized businesses for 'investment banking' advice delivered as 'consulting' rather than 'brokerage', with everyone aligned around making the best decision rather than necessarily closing a deal. This is different from the M&A advice generally available to these businesses or their go-to professional advisors.

Here are some businesses we helped in 2016:

A management team seeking backing to buy home health agencies. We helped orient them to the investor market, until they felt confident enough to go it alone.

A financial advisory firm at a crossroads in the founder’s career. We helped the founder identify, quantify and assess options.

A systems integration company approached by a Fortune 100 company about buying the business. We helped the owner present his company in a polished, professional way, interacted with the suitor's corporate development staff, and moved the transaction discussion toward a conclusion.

A medical practice approached by a private-equity backed company about buying the practice. We helped the partners (1) understand the investment group's due diligence request, (2) communicate the due diligence information in a way that highlighted trends in their business and led to a high-quality Letter of Intent, (3) identify their alternatives to accepting an offer from the investment group, (4) determine the criteria for a sell/don't-sell decision, and ultimately (5) decline the offer with confidence in their choice.

A team of repeat entrepreneurs needing scale-up capital to take advantage of a new distribution agreement. We helped the team by articulating the business in terms that investors would understand, approaching >150 potential investors on their behalf, and connecting them with joint investor-business development contacts in their industry.

A new hedge fund management company seeking its first limited partners after being seeded by a large investment company. We applied our experience as asset allocators and our network in the pension and endowment community to help the fund managers hone their pitch to investors.

A healthcare consulting firm that needs equity-like capital as bonding. We helped them present the investment opportunity to one strategic investor and acted as a sounding board for the leadership team as they engaged with larger industry players.

A family-owned manufacturing company running out of time. We helped the CEO and a key family shareholder confirm that they had considered and pursued all the practical options for the company. We managed the process of contacting potential strategic buyers, including competitors, on the company’s behalf.

A well-funded financial technology startup. We acted briefly as interim CFO and provided extra bandwidth to support the CEO in raising angel capital.

A consulting firm with a well-researched idea about a company that would benefit from their investment contacts. We helped them strategize the approach to both the company and investors, in pursuit of a deal that would make sense to all parties.

We got to know these businesses by being a consistent source of support for our professional colleagues: lawyers and CPAs in regional firms, financial planners, and commercial and investment bankers.

We helped these professionals by being uniquely prepared to address their clients' complex, speculative projects, and immediately available to listen to their clients' issues and concerns.

I feel proud of Oaklyn Consulting's start and look forward to making a difference for more clients and professional colleagues in 2017.

]]>http://oaklynconsulting.com/who-we-helped-in-2016Four Takeaways for Any Business Ownerhttp://oaklynconsulting.com/venturesouth-summitFri, 02 Dec 2016 06:00:00 GMTFrank WilliamsonOC was honored to sponsor the VentureSouth Summit in Greenville, SC on Nov. 30 and Dec. 1.We took away 4 lessons valuable to both angel investors and business owners at almost any stage of development:Selling a business is just one strategic option for a founder, but it is an important one. ]]>OC was honored to sponsor the VentureSouth Summit in Greenville, SC on Nov. 30 and Dec. 1.We took away 4 lessons valuable to both angel investors and business owners at almost any stage of development:Selling a business is just one strategic option for a founder, but it is an important one. OC was honored to sponsor the VentureSouth Summit in Greenville, SC on Nov. 30 and Dec. 1.

We took away 4 lessons valuable to both angel investors and business owners at almost any stage of development:

Selling a business is just one strategic option for a founder, but it is an important one. For companies with outside investors, it is a choice the founder has probably already made. In fact, experienced angel investors will assess exit plans begun before investing.

Successful exits result from lots of work over a long period of time. Estimated effort: 1-2 person years with an experienced team, and “if a very smart CEO and CFO wanted to learn enough to do a reasonable job themselves, I’d triple the time estimate — at least.”

Exiting from a business is a process, like sales or recruiting. The consequence of not thinking about exiting as a process is just the same as not thinking about, say, sales as a process — a business gets what it’s lucky to get, good or bad.

Almost every company needs a team to manage this process. In fact, “the single most controllable factor in determining whether a saleable company will actually be sold is the capability of the exit team” charged with maximizing the exit price and ensuring that the eventual transaction closes. The ideal team is: the CEO, an M&A advisor (our role, by the way), a small committee of the board, and legal and accounting professionals.

There were also some good resources for any investor or business owner to browse:

To learn more, call for our perspective on similar issues and how they apply in the Southeast.

]]>http://oaklynconsulting.com/venturesouth-summitGetting Financially Savvy with Your Finance Departmenthttp://oaklynconsulting.com/getting-financially-savvy-with-your-finance-departmentTue, 15 Nov 2016 06:00:00 GMTFrank WilliamsonOn November 14, the Nashville Business Journal ran a Career & Workplace blog post by me. The takeaway is that it's expensive and probably unnecessary to hire for all the "Chief Financial Officer" skills a growing company will need, just like you probably wouldn't hire a full-time lawyer for all the "General Counsel" skills you might need. But it's wise (1) to know your and your staff's limitations and (2) to develop a relationship with someone ...]]>On November 14, the Nashville Business Journal ran a Career & Workplace blog post by me. The takeaway is that it's expensive and probably unnecessary to hire for all the "Chief Financial Officer" skills a growing company will need, just like you probably wouldn't hire a full-time lawyer for all the "General Counsel" skills you might need. But it's wise (1) to know your and your staff's limitations and (2) to develop a relationship with someone ...

On November 14, the Nashville Business Journal ran a Career & Workplace blog post by me.

The takeaway is that it's expensive and probably unnecessary to hire for all the "Chief Financial Officer" skills a growing company will need, just like you probably wouldn't hire a full-time lawyer for all the "General Counsel" skills you might need.

But it's wise (1) to know your and your staff's limitations and (2) to develop a relationship with someone who can provide these skills when you need them.

If you'd like to read more, follow this link or download the attachment.

Getting Financially Savvy with Your Finance Department

From solo-entrepreneur to large-scale enterprise, every business owner understands the need for a sound financial strategy to guide business growth and maximize profits.

When it comes to navigating the financial side of a company, business owners have a responsibility to make appropriate and thoughtful fiscal decisions.

Being financially smart with a company’s financial department can be done in three primary ways:

1. Know your in-house needs. The CFO might be one of the “big three” c-suite positions, but for many companies,this level of financial acumen on the payroll is unnecessary. If business decisions regularly require key financial insights about the company—insights that may needtime to prepare and evaluate — a CFO may be appropriate to keep on staff. If, however, your financial needs lean more toward keeping up with payroll and monitoring revenue and expenses, a bookkeeper or CPA, either on staff or outsourced, can be a more cost-effective way to get the financial assistance you need. After all, why pay for Wall Street experience every day if you aren’t actually using it? It’s also wise to be cautious of the do-it-yourself option. Unless finance is where they shine, CEOs that spend a significant amount of time in the business books lose time that should be used to grow business.

2. Understand when heavy-duty financial insight is needed. Even if a CFO isn’t rightfor your business just yet, a small business may at some point need high-level financial planning or in-depth financial analysis. Business owners don’t want to miss a growth opportunity simply because it doesn’t have the right internal financial knowledge to make a sound decision. In these cases, third party advisers, such as legal teams, business consultants, financial specialists and others can step in to provide effective counsel when it’s needed. The key is to know when it’s appropriate to seek this advice.

That tipping point usually comes when the business is either beginning or considering a period of transition, such as making a major expansion, bringing on an investor, planning for a significant restructuring, and certainly selling the business. Such times merit ahard look beyond the financial numbers themselves, and require a deep dive into the story the financials tell about the business. That is, maybe one segment of the business or customer relationship is trending far ahead of the market, or another is creating a drag that is being hidden by successes elsewhere. Most always, transitions will call for research into a company’s financial trends, histories and projections.

3. Get the right advice for the right price. A business’s finance strategy includes looping in the right people at the right price and payment structure for your company. For example, lawyers will be able to assist with risk analysis and contracting for a business-growth move, but they may not have the market experience and financial skill that a banker or financial specialist might have — and that your company needs. Depending on the matter at hand, an investment banker or a business/financial consultant could help guide a company through a transition like a sale or an acquisition. But, how you’ll pay for that advice may look quite different. Consultants may charge higher hourly fees than an investment banker. But when transactions are involved, an investment banker could take a significant portion of take-home income as his commission — meaning the net profit you had in mind for your retirement may not be the figure you end up with.

Bringing fiscal responsibility to the finance department is just as important as any other area of the business. It’s all about balancing your company’s growth and opportunities with the appropriate level of expertise you need at that specific time in your business's life.

]]>http://oaklynconsulting.com/getting-financially-savvy-with-your-finance-departmentWhen NOT to Accept an Offer For Your Businesshttp://oaklynconsulting.com/startup-southerner-when-not-to-accept-an-offer-for-your-businessWed, 09 Nov 2016 06:00:00 GMTFrank WilliamsonOn November 8, Startup Southerner published an article by me about exit strategies for entrepreneurs. Take-away: Be careful about offers to buy your company. Sometimes "no deal" is the best deal, and sometimes saying this early, before you've sunk time and effort into the huge project of responding to interest in buying your company, takes a lot of discipline. ]]>On November 8, Startup Southerner published an article by me about exit strategies for entrepreneurs. Take-away: Be careful about offers to buy your company. Sometimes "no deal" is the best deal, and sometimes saying this early, before you've sunk time and effort into the huge project of responding to interest in buying your company, takes a lot of discipline. On November 8, Startup Southerner published an article by me about exit strategies for entrepreneurs. Take-away: Be careful about offers to buy your company.

Sometimes "no deal" is the best deal, and sometimes saying this early, before you've sunk time and effort into the huge project of responding to interest in buying your company, takes a lot of discipline.

Exits eventually make sense, on your terms, among your choice of acquirers and when you've got the business ready. But they can make little sense at other times.

When NOT to Accept an Offer For Your Business

For many entrepreneurs, landing a private equity deal is a dream come true. It’s a sign of success and a catalyst toward bringing an idea to full fruition. However, despite the excitement and flattery, some private equity deals—as lucrative as they may sound initially—should be respectfully declined.

How does a business owner determine if the offer is a good fit for both him and the company? Here are three factors of a private equity offer that may prompt you to decline the deal:

1. The price isn’t right.

The initial offer may appear impossible to turn down at first, but the value will most likely decrease by the end of the transaction. That’s because a private equity firm will provide the best possible price initially. But as the due diligence process continues, any potentially negative information that is discovered will be given a monetary value, which is then deducted from the original offer.

To be proactive, research any non-attractive elements of your business, such as a decline in revenue from a specific product or weaknesses compared to competitors. Then, calculate an estimated cost for those setbacks. This allows you to provide the private equity firm with any negative information upfront and to foresee what the final offer might look like.

Business owners must also determine if profits will be sufficient. If there is only one owner, is the revenue from the sale enough to pay off business debt and cover her retirement? Perhaps the business is co-owned—would the revenue still be substantial when split equally or proportionately among all owners?

Taxes, attorney fees, distribution of funds and other factors should be carefully considered to make sure each owner is comfortable with the profit he would receive from the transaction.

2. Changing ownership creates difficulties.

The business owner’s exit from or continuation with her company cannot be ignored when thinking about private equity deals. If the owner remains on board, she would likely lose control of the company’s operations. The psychological element of this transition can be difficult. Her opinions no longer carry as much weight as they did before, and she is not involved in the day-to-day decisions of the company she worked hard to build.

In contrast, what is the impact on the business if the owner cuts ties with his company after the transaction? Often, a business owner is the face of the company, and customer loyalty is built upon the trusting relationship he or she has developed with the owner. A business owner should think about how his personal involvement in the company, or lack thereof, would affect the future success of the business.

3. New ownership affects company culture.

A company’s success is built on the business values and culture set forth by the business owner. As such, one of the most important factors to consider when weighing a private equity offer is how new management will affect the company’s culture.

Under new ownership, will employees continue to feel valued and receive the same benefits? Will the owner’s absence deter longstanding customers from doing business with the company? It’s essential that new ownership aligns with the core business values of the original company, or it will be hard to generate long-term success.

Deciding if you should accept a private equity firm’s offer to buy your company can be a difficult process. When considered wisely, it means exploring the tangible elements of the transaction, such as profit, and the non-tangibles, like business reputation and culture.

If the deal doesn’t feel right, graciously decline the offer—and then continue building your company’s success. After all, the next offer could be exactly the one you’ve been waiting for.

]]>http://oaklynconsulting.com/startup-southerner-when-not-to-accept-an-offer-for-your-businessSeth Faler, Former Unum Executive, Joins Oaklyn Consultinghttp://oaklynconsulting.com/seth-faler-joins-oaklyn-consultingFri, 16 Sep 2016 05:00:00 GMTfwilliamson@oaklynconsulting.comFrank WilliamsonSeth Faler served as director of corporate development and capital management for Fortune 500 insurance companyCHATTANOOGA, Tenn., Sept. 9, 2016—Oaklyn Consulting, a business financial strategy firm that launched in August, announced today that Seth Faler has joined the firm as a consultant. Faler comes to Oaklyn Consulting from Unum Group, where he was director of corporate development and capital management.In his role at Oaklyn Consulting, Faler will help business owners use financial analysi...]]>Seth Faler served as director of corporate development and capital management for Fortune 500 insurance companyCHATTANOOGA, Tenn., Sept. 9, 2016—Oaklyn Consulting, a business financial strategy firm that launched in August, announced today that Seth Faler has joined the firm as a consultant. Faler comes to Oaklyn Consulting from Unum Group, where he was director of corporate development and capital management.In his role at Oaklyn Consulting, Faler will help business owners use financial analysi...

Seth Faler served as director of corporate development and capital management for Fortune 500 insurance company

CHATTANOOGA, Tenn., Sept. 9, 2016—Oaklyn Consulting, a business financial strategy firm that launched in August, announced today that Seth Faler has joined the firm as a consultant. Faler comes to Oaklyn Consulting from Unum Group, where he was director of corporate development and capital management.

In his role at Oaklyn Consulting, Faler will help business owners use financial analysis to navigate strategic issues and challenges, such as responding to an offer to buy the company, determining why and how to pursue growth funding or how to transition management within the business.

“Seth and I worked together at Unum, and I was always impressed with his financial acumen. Equally important to our firm is Seth’s ability to forge strong relationships and to coach people through complex transactions,” said Frank Williamson, founder of Oaklyn Consulting.

Faler joins Oaklyn Consulting with more than 20 years of experience in financial management, including capital management, insurance, investments and mergers and acquisitions. Throughout his 10-year tenure at Unum Group, Faler coordinated transactions up to $700 million, worked on more than $2 billion in potential deals and helped lead the securitization of $10 billion of insurance risk.

Faler also served as senior vice president of Swiss Re and as an equity research analyst at Second Curve Capital. Faler received a bachelor’s degree from Harvard College and a master’s degree in finance from The Wharton School of The University of Pennsylvania. He holds the Chartered Financial Analyst (CFA) designation.

Williamson launched Oaklyn Consulting after serving as managing partner of FourBridges Capital Advisors. Oaklyn Consulting focuses on the financial side of a business, versus the marketing or operational approach of the typical consulting firm, and is currently serving businesses within a range of industries facing strategic financial issues.

]]>http://oaklynconsulting.com/seth-faler-joins-oaklyn-consultingFormer FourBridges Capital Advisors Managing Partner Launches Oaklyn Consulting – A Business Financial Strategy Firmhttp://oaklynconsulting.com/former-fourbridges-capital-advisors-managing-partner-launches-oaklyn-consulting-a-business-financial-strategy-firmTue, 16 Aug 2016 12:00:00 GMTOaklyn ConsultingNew firm helps businesses evaluate their financial position to make decisions about funding growth, managing challenges, selling the company and other strategic matters Unique á la carte CFO services for growing or transitioning companiesCHATTANOOGA, Tenn. August 16, 2016—Business strategy and finance expert Frank Williamson announced today the launch of a business consulting firm that focuses on the financial side of a business, versus the marketing or operational approach of...]]>New firm helps businesses evaluate their financial position to make decisions about funding growth, managing challenges, selling the company and other strategic matters Unique á la carte CFO services for growing or transitioning companiesCHATTANOOGA, Tenn. August 16, 2016—Business strategy and finance expert Frank Williamson announced today the launch of a business consulting firm that focuses on the financial side of a business, versus the marketing or operational approach of...New firm helps businesses evaluate their financial position to make decisions about funding growth, managing challenges, selling the company and other strategic matters

Unique á la carte CFO services for growing or transitioning companies

CHATTANOOGA, Tenn. August 16, 2016—Business strategy and finance expert Frank Williamson announced today the launch of a business consulting firm that focuses on the financial side of a business, versus the marketing or operational approach of the typical consulting firm.

Oaklyn Consulting helps business owners use financial data to navigate strategic issues and challenges, such as responding to an offer to buy the company or determining why and how to pursue growth funding.

“As we talk with business owners, and the lawyers, bankers, wealth managers, accountants and investment bankers who support them, we hear that people are struggling with business strategy and financial questions that they don’t have the time, staff or context to dig into,” said Williamson, who is Oaklyn Consulting’s managing partner and the former managing partner of FourBridges Capital Advisors, a Southeastern mergers and acquisitions advisor.

“Oaklyn Consulting was formed to meet this need. We offer the expertise needed to anticipate investors’ questions, recast financial planning and analysis, and understand industry trends – combined with the understanding and emotional sensitivity required to listen carefully, help companies reach strong decisions they are comfortable with and communicate effectively with capital providers,” he added.

The firm is headquartered in Chattanooga and will serve businesses across the Southeastern United States in a range of industries, as well as across the globe in the financial services and healthcare industries.

Helping a family-owned manufacturing business understand its options for transitioning management

Connecting a financial advisory firm with strategic partners who share its vision for growth

Helping a business services company evaluate a potential merger partner

“Business owners are seeking our assistance on a variety of strategic issues, particularly those that involve financing growth or managing succession. In these cases, there is sometimes a clear opportunity to seek competitive proposals from banks or investors, but often there is not. Instead, the best course might be to make operating changes, build a long-term financing relationship or even ‘do nothing, but with new conviction,’” said Williamson.

We have found that most business owners are sales- and marketing-driven, but they are thrown into financial decision-making by default of their title—even if it’s not how they can best serve their companies,” said Williamson. “Moreover, most CEOs are so close to their business that it’s hard for them to be fully objective when important strategy questions arise – not to mention that they are up to their eyeballs with daily priorities and don’t have the staff or time to handle things like investor relations or capital-raising work. For most companies, these aren’t daily needs that require full-time staffing. But when the need arises, it’s critical to have the right counsel by your side,” he added.

With more than 20 years of business, finance and investment experience, Williamson has closed more than $7 billion in mergers, acquisitions and financing transactions, ranging from $500,000 to $1 billion, and has held leadership positions in corporate development, strategy, merger integration, finance, sales, marketing, underwriting and investments.

Before serving as managing partner of FourBridges, Williamson was an executive at Unum Group during a time when the company grew from $2.5 billion to $10 billion in annual revenue, serving among other roles as Chief Investment Officer and head of capital management. The Harvard Business School graduate also served as interim COO for Vets First Choice, which was, at the time, the fastest growing business services company on the Inc. 500 list. Williamson currently sits on the board of LaunchTN, a public-private partnership focused on supporting the development of high-growth companies in Tennessee.

About Oaklyn Consulting:

Founded in 2016, Oaklyn Consulting is a strategy consulting firm with a financial focus. It serves businesses across the Southeastern United States in a range of industries, as well as across the globe in the financial services and healthcare industries. Oaklyn Consulting helps business owners with questions about business and financial direction to clarify alternatives, analyze costs and benefits and reach well-informed decisions. Oaklyn Consulting is based in Chattanooga, Tennessee and led by Managing Partner Frank Williamson.

]]>http://oaklynconsulting.com/former-fourbridges-capital-advisors-managing-partner-launches-oaklyn-consulting-a-business-financial-strategy-firmGoing Big at BIG Council: An Overview of the M&A Markethttp://oaklynconsulting.com/going-big-at-big-council-an-overview-of-the-ma-marketTue, 01 Mar 2016 13:00:00 GMTOaklyn ConsultingEvery few months, North Carolina’s BIG Council coordinates must-attend events for regional business owners. At their January event – which focused on strategies to build, scale, and monetize a high-performance business – I co-led a presentation on the region’s mergers & acquisitions (M&A) market with DecisionPoint Advisors’ Managing Partner Doug Ellis. It was a point-counterpoint discussion: I talked about traditional businesses while Doug spoke on tech comp...]]>Every few months, North Carolina’s BIG Council coordinates must-attend events for regional business owners. At their January event – which focused on strategies to build, scale, and monetize a high-performance business – I co-led a presentation on the region’s mergers & acquisitions (M&A) market with DecisionPoint Advisors’ Managing Partner Doug Ellis. It was a point-counterpoint discussion: I talked about traditional businesses while Doug spoke on tech comp...Every few months, North Carolina’s BIG Council coordinates must-attend events for regional business owners. At their January event – which focused on strategies to build, scale, and monetize a high-performance business – I co-led a presentation on the region’s mergers & acquisitions (M&A) market with DecisionPoint Advisors’ Managing Partner Doug Ellis. It was a point-counterpoint discussion: I talked about traditional businesses while Doug spoke on tech companies.

Read the takeaways below – or if you’ve got 20 minutes, there’s a link to the video at the end.

The Traditional Market

For 'traditional' businesses (basic services + industries), the force driving M&A is private equity investing, by funds or family offices, acting either directly or via add-on acquisitions by their portfolio companies.

There is also an increased appetite to look at 'stretch' deals — deals that are riskier or more complex than usual. For business owners looking to grow or sell, the headline is “be prepared” and know you’re selling into a 1% close ratio market. Before seeking capital, businesses should build a five-year projection model that can withstand scrutiny and that an investor would find attractive.

The Technology Market

M&A activity is incredibly robust in the technology space, and it’s driven by a few factors. Above all, there are huge hoards of cash on balance sheets, so acquisitions are appealing -- and often, necessary. Many companies have 'righted their ships' since the recession, boards are confident, and quotas are high. Businesses have found that they can’t meet their goals through organic growth alone, so growth through acquisition has become all the more important.

Increasing competition also plays a role. There’s a strong appetite for differentiation and IP in tech, and the big companies are always seeking new products and features.

Corporate development officers are looking at lots of deals for every transaction completed. They are both under pressure to add revenue and to avoid risks. Therefore, the due diligence process is intense, even for smaller deals, and it’s all the more important for a seller’s legal, finance and IP 'houses' to be in order.

The SQL Sentry Story

Charlotte has some talented entrepreneurs and real success stories. SQL Sentry, a bootstrapped IT company, for example, took $25 million in growth capital last year from Mainsail Ventures. Following the presentation I led with Doug, SQL co-founder Ken Teeter and I did a 'fireside chat' about what changes this investment has created for him and his company. If you have a moment, I encourage you to watch the videos below – there’s a lot to learn from all of the presenters. (Password: BIG)

]]>http://oaklynconsulting.com/going-big-at-big-council-an-overview-of-the-ma-market6 Ways to Get Your Business in Shape as 2016 Rolls Inhttp://oaklynconsulting.com/6-ways-to-get-your-business-in-shape-as-2016-rolls-inTue, 15 Dec 2015 13:30:00 GMTOaklyn ConsultingLooking back, 2015 has proven to be a banner year for middle-market companies looking to sell or seeking outside investment. And with interest rates remaining low and ample capital ready to be deployed, the new year could continue this positive trend. But mental and operational preparations are key to taking advantage of what opportunities may lie ahead. ]]>Looking back, 2015 has proven to be a banner year for middle-market companies looking to sell or seeking outside investment. And with interest rates remaining low and ample capital ready to be deployed, the new year could continue this positive trend. But mental and operational preparations are key to taking advantage of what opportunities may lie ahead.

Looking back, 2015 has proven to be a banner year for middle-market companies looking to sell or seeking outside investment. And with interest rates remaining low and ample capital ready to be deployed, the new year could continue this positive trend. But mental and operational preparations are key to taking advantage of what opportunities may lie ahead. To start, work through this checklist.

1. Review your goals.Are you building a business to sell, or do you plan to continue running it for the foreseeable future? It’s time to reassess goals. Ask yourself: Where is the business now? Where do I want it to go? What do I want to be doing one year from now? Once you have these answers, create a detailed goal-fulfillment plan for 2016.2. Do some research.No two years are the same, and with 2016, we have an election in the mix. Even though no one can predict the future, we can often anticipate a course of change. Talk with advisors, peers and analysts to get a sense of where the market could tilt in the coming year.

3. Explore the options.Maybe a sale is right for you this year. Or it could be time to consider a joint venture or a strategic partnership. Perhaps your next step requires financing. Regardless, think about all the options ahead and examine how each could improve your business. Then get into details. For instance, from a financing perspective, traditional bank loans can be difficult to obtain and expensive to repay. However, small to medium-sized companies have many additional financing options, such as private equity or debt equity. But don’t be hasty. Work with advisors who can recommend the right solution for your company.

4. Check your books.No matter where you’re headed, you’ll want your financial narrative to tell a strong story. Before year-end, enlist a third party to audit your finances. A fresh set of eyes can help target small problems before they can impact next year’s bottom line.

5. Evaluate your brand.Does your brand set you apart from competitors? Would investors know your name? If not, think about ways to market your company in the coming year. It starts with knowing your target audience and understanding what makes your business unique, trustworthy and valuable. Then, spread the word.

6. Work smarter.How often do you resort to a quick fix to keep your day-to-day operations in motion? Think of reoccurring issues your company has faced. This is the time to design a permanent solution and build a stronger company foundation that can support your next stage of growth.

To position your company for a new year, it’s important to plant the seeds of success now. Otherwise, you could risk losing a pivotal opportunity for lack of preparation.

]]>http://oaklynconsulting.com/6-ways-to-get-your-business-in-shape-as-2016-rolls-inFourBridges’ Leader, New Tech Point Man on a Rising Breed of Southern Entrepreneurs, Upcoming Opportunitieshttp://oaklynconsulting.com/fourbridges-leader-new-tech-point-man-on-a-rising-breed-of-southern-entrepreneurs-upcoming-opportunitiesFri, 02 Oct 2015 15:05:00 GMTOaklyn Consulting**This post was originally published by Southern/alpha.Interview by: Geert De LombaerdeThe leaders of Chattanooga-based investment FourBridges Capital Advisors earlier this month announced they had recruited Atlanta technology executive Doug Johns to be a senior advisor. Johns is a former senior executives at Internet Security Systems and Compaq Computer, among others, who now is chairman of HDJ Wireless Enterprise, an Internet of Things venture that runs Atlanta-based sensing and control networ...]]>**This post was originally published by Southern/alpha.Interview by: Geert De LombaerdeThe leaders of Chattanooga-based investment FourBridges Capital Advisors earlier this month announced they had recruited Atlanta technology executive Doug Johns to be a senior advisor. Johns is a former senior executives at Internet Security Systems and Compaq Computer, among others, who now is chairman of HDJ Wireless Enterprise, an Internet of Things venture that runs Atlanta-based sensing and control networ...

**This post was originally published by Southern/alpha.

Interview by: Geert De Lombaerde

The leaders of Chattanooga-based investment FourBridges Capital Advisors earlier this month announced they had recruited Atlanta technology executive Doug Johns to be a senior advisor. Johns is a former senior executives at Internet Security Systems and Compaq Computer, among others, who now is chairman of HDJ Wireless Enterprise, an Internet of Things venture that runs Atlanta-based sensing and control networks companyNivis.

Adding Johns to the team gives FourBridges a much more extensive reach into the Southeast’s tech and telecom sectors, especially in its biggest city. Scanning the region, Johns says he sees opportunities aplenty, especially when it comes to working with companies who need advice and expertise just as much as they need to do a deal.

Johns and FourBridges Managing Partner Frank Williamson recently took some time to chat with us about their news and the entrepreneurial landscape of the Southeast. Here are some excerpts from our conversation.

Doug, how much of time will you devote to FourBridges and what are your main priorities as you get started?

Johns: I’ll spend at least half of my time on FourBridges, making connections with companies around the region. Ideally, I’ll be locating companies with revenue — that really separates the sheep from the wolves —and some level of EBITDA, which will say to me that this is a real company.

Too often, tech companies have a set of PowerPoint slides that can make them seem fabulous but there may not be much more to them than those slides. A big part of my mandate will be not to dig dry holes.

When it comes to young entrepreneurs, particularly in technology, have you noticed a change in tone over the past decade when it comes taking risks and starting companies?

Williamson: Absolutely. Many young people have seen that, if their idea doesn’t work here and now, there’s a chance it will work somewhere else down the road if they keep working on it. There’s more of a California spirit to them now, one that looks at failure as more of a learning experience than a tattoo of shame.

How does that change what FourBridges does?

Williamson: It changes our potential client base. There’s a whole lot more velocity to what entrepreneurs are doing in terms of starting something that they intend to be an asset rather than an occupation. Many more of them are happy to start a business, grow it as fast as possible and exit.

It sounds like you now have to find these entrepreneurs earlier in their careers.

Williamson: Yes, we do. Also, the fact that more people across the South are building companies this way is a testament to the health of the ecosystem. If they build and sell that asset, they’ll then be able to redeploy their cash. For us, that means we need to have something more relevant to say to young companies. We think there is a role for us much like there is for accountants and lawyers. We can help prepare businesses for big growth.

We love the ECD aspect of what we do. It’s my belief that, in three to five years, a lot of the investments made recently in the entrepreneurial ecosystems around the region will be realized. There will be many exits and larger raises. That’s why Doug has come on with us. There are a lot of stories to tell and enough companies are growing into a position where an intermediary like us can be a real help.

Johns: Entrepreneurs’ attitudes to deals also have changed. There was a time when transactions were much more adversarial, more mercantile. Now, entrepreneurs are looking for advisors for a while; they’re not looking for a deal right away.

Younger entrepreneurs are more interested in a relationship. They maybe have heard from their parents stories of when things went bad. They know it’s important to have a relationship, that you need someone who has ideally worked in their shoes.

]]>http://oaklynconsulting.com/fourbridges-leader-new-tech-point-man-on-a-rising-breed-of-southern-entrepreneurs-upcoming-opportunitiesThe Data has Spoken: The Southeast is a Seller's Markethttp://oaklynconsulting.com/the-data-has-spoken-the-southeast-is-a-sellers-marketWed, 30 Sep 2015 12:00:00 GMTOaklyn Consulting**This article originally appeared in the Nashville Business Journal on Sept. 30, 2015.Dust from the recession has settled and an estimated $400 billion in private equity funds alone are chasing down businesses to buy or invest in. Nashville companies, you’re at the center of one of the best deal environments since 2007.In April, Investment Banking South conducted a survey on M&A activity in the Southeast with investors, business owners and business advisors. ]]>**This article originally appeared in the Nashville Business Journal on Sept. 30, 2015.Dust from the recession has settled and an estimated $400 billion in private equity funds alone are chasing down businesses to buy or invest in. Nashville companies, you’re at the center of one of the best deal environments since 2007.In April, Investment Banking South conducted a survey on M&A activity in the Southeast with investors, business owners and business advisors.

Dust from the recession has settled and an estimated $400 billion in private equity funds alone are chasing down businesses to buy or invest in. Nashville companies, you’re at the center of one of the best deal environments since 2007.

In April, Investment Banking South conducted a survey on M&A activity in the Southeast with investors, business owners and business advisors. The findings suggest that a lot of money is seeking to do business in the region.

For Nashville business owners considering an exit, there may be no time like the present. Here are a few factors that have created a seller’s market:

1. Investors have shown increased interest in the Southeast

Seventy-one percent of investors surveyed by Investment Banking South believe that the quality of deal flow in the Southeast is on par with the rest of the United States. Southeastern companies in the manufacturing industry, especially, are piquing the interest of investors from all over. According to the survey results, 89 percent of investors are targeting manufacturing companies.

Consider the recent sale of Southern Tool Steel, a Tennessee-based manufacturing company, which operates a distribution center in Gallatin. Ryerson, an international distributor and processor of metals, acquired Southern Tool Steel as a strategic add-on to strengthen its foothold in the region and fill out its product offering.

Many companies are on this similar hunt for growth, and with record amounts of cash available, buyers are increasingly willing to take on more risks when it comes to deals. At this rate, according to the Wall Street Journal, 2015 is on track to be the best year in terms of M&A activity since the financial crisis.

2. The market is not overcrowded – yet

The survey concluded that a majority of investors perceive the quantity of deal flow to be lower in the Southeast, driving more competition for deals and higher multiples for sellers.

This competitive environment, which favors sellers, may become increasingly buyer-friendly in the coming years as more baby boomers begin cashing out to retire. According to a report by Robert Avery of Cornell University, a majority of the generation’s wealth is tied up in 12 million privately-owned business. Over the next five to 10 years, approximately 65 percent to 75 percent of the nation’s small companies will be put up for sale.

3. Interest and tax rates are favorable (for now)

Current interest rates drive up private equity valuations, since the cost of borrowing money to fund an acquisition is historically low. This won’t last forever. Federal Reserve officials will gather soon to consider increasing interest rates for the first time since the end of the Great Recession. Also, the Obama administration’s 2016 budget calls for raising the top rate on capital gains from 23.8 percent to 28 percent.

M&A remains strong now, but remember—the last time we saw this level of activity, we were only a few deals away from a national recession where companies hoarded cash and deal volume dropped drastically. For business owners who are ready to sell, you may be hard-pressed to find a healthier deal environment than the current one.

]]>http://oaklynconsulting.com/the-data-has-spoken-the-southeast-is-a-sellers-marketWhat the Recent Sale of Southern Tool Steel Tells Us About the M&A Market in the Southeast – Part 2http://oaklynconsulting.com/what-the-recent-sale-of-southern-tool-steel-tells-us-about-the-ma-market-in-the-southeast-part-2Mon, 31 Aug 2015 15:00:00 GMTOaklyn ConsultingFrank Williamson is managing partner of FourBridges Capital Advisors— a middle-market investment bank that specializes in serving privately owned businesses in the Southeast and the company behind Investment Banking South. He has a 20-year career managing mergers, acquisitions and financing as an investment banker and corporate executive. He holds a master’s in business administration from Harvard Business School and a bachelor’s degree from Williams College.This is a continuat...]]>Frank Williamson is managing partner of FourBridges Capital Advisors— a middle-market investment bank that specializes in serving privately owned businesses in the Southeast and the company behind Investment Banking South. He has a 20-year career managing mergers, acquisitions and financing as an investment banker and corporate executive. He holds a master’s in business administration from Harvard Business School and a bachelor’s degree from Williams College.This is a continuat...

Frank Williamson is managing partner of FourBridges Capital Advisors— a middle-market investment bank that specializes in serving privately owned businesses in the Southeast and the company behind Investment Banking South. He has a 20-year career managing mergers, acquisitions and financing as an investment banker and corporate executive. He holds a master’s in business administration from Harvard Business School and a bachelor’s degree from Williams College.

This is a continuation of a two-part interview series with Frank Williamson. Check out the first segment, where Williamson discussed the strength of the manufacturing sector, the increase of investor interest in the Southeast and how money from outside the region behaves differently than local investment.

Key Takeaways:

Even though boomer-owned companies may flood the market over the next decade, strong businesses will most likely still find little difficulty in selling.Deciding to sell can be the longest part of the selling process. After that, should take roughly three to six months to prepare the business and an additional three to six months to market the business and negotiate and close a deal.As a seller, it’s important to be realistic about your business. Deal advisors like investment bankers, lawyers and accountants can help clean up the presentation, but they cannot build an entirely new company.Because selling a business should result in swapping the source of the owner’s income from a business to investments, personal advisors like lawyers and wealth managers can do a lot to create an efficient transition.

Q. According to the Investment Banking South survey, deal flow is a little lower in the Southeast than other parts of the country. Is it hard to find someone who wants to sell right now?

A. A lot of people have been saying there are not as many deals as they’d like to see in the region. However, this doesn’t necessarily mean there are fewer deals per capita in the Southeast — just that people would like to see more, which is really a testament to how hot the region is right now.

People would rather be here than somewhere else. Because of that, there’s a perceived shortage of companies. There are piles of people who want to put money here but not enough quality companies to buy. Right now, in some growing Southeastern cities like Charleston, there are a lot of young companies that aren’t candidates to exit today but will be in the future. This bodes well for the future.

Q. Can we expect to see a glut of companies on the market in the coming years with the impending baby boomer exit?

A. Yes and no. While there will be a lot of business owners entering the life stage where they want to start slowing down, there are a lot of people who will solve that problem their own way. Not all will be looking for outside buyers. Some will create multi-generational companies, some will sell their business to management or employees and some probably won’t plan ahead at all.

Even as boomer-owned companies flood the market, if you have a good business, it doesn’t necessarily mean the window to sell is closing. If you’re thinking of timing the market to hit a peak, don’t. Conditions are good today and there are too many short-term uncertainties like politics and interest rates. But if you’ve got a good operation and you’re not looking to sell for five to 10 years, you’ll be fine. Periodically, business owners need to think about their long-term goals and plan accordingly.

Q. FourBridges has been speaking with Southern Tool Steel for a couple of years, but the actual selling process began six months ago. What’s the normal timeline for selling a business?

A. A lot of our client engagement time is spent consulting with owners and getting a business ready for sale. Once the owners and the business plan are ready, you can make a sale happen in three to six months. The longest part of the process, naturally, is a business owner making the decision that they’re ready to sell. With the current state of the market, there’s roughly a three- to six-month timeline between a business owner deciding he’s ready to sell to actually being ready, and then it takes an additional three to six months to sell after that. These steps would take longer if we were looking at a buyer’s market instead of a seller’s market.

Q. When you talk about getting a company ready for sale, does that mean getting paperwork in order or actually changing the company?

A. It’s about the paperwork — never changing the company. A business is a living, breathing thing. You can clean it up, get it detailed, sweep the floors and make it look better, but it is what it is.

Nevertheless, there is a lot of business paperwork to get your arms around: financial reports, operating reports, projections, contracts, asset listings, deeds, stock certificates, and on and on.

There is also a lot of personal paperwork and planning to address as a business owner transitions from earning a living from a business to earning a living from an investment portfolio. Think of gifts, trusts, wills, asset allocation plans and so forth.

People know already that they can’t change a business overnight, so it’s best just to be realistic about what they own. If you’ve got a Dodge, call it what it is and present it well. Don’t trick yourself into thinking it’s a Mercedes. As an operator, you can obviously ask yourself “Am I going to build myself a Mercedes?” years before you think about selling it, but once exit time comes, deal advisors can’t change the model for you.

]]>http://oaklynconsulting.com/what-the-recent-sale-of-southern-tool-steel-tells-us-about-the-ma-market-in-the-southeast-part-2What the Recent Sale of Southern Tool Steel Tells Us About the M&A Market in the Southeast – Part 1http://oaklynconsulting.com/what-the-recent-sale-of-southern-tool-steel-tells-us-about-the-ma-market-in-the-southeast-part-1Thu, 20 Aug 2015 15:00:00 GMTOaklyn ConsultingFrank Williamson is managing partner of FourBridges Capital Advisors, a middle-market investment bank – and the curator of IB South – that serves privately owned businesses in the Southeast. Frank has a 20-year career managing mergers, acquisitions and financing as an investment banker and corporate executive. He holds a master’s in business administration from Harvard Business School and a bachelor’s degree from Williams College.Key Takeaways:The sale of Southern Tool St...]]>Frank Williamson is managing partner of FourBridges Capital Advisors, a middle-market investment bank – and the curator of IB South – that serves privately owned businesses in the Southeast. Frank has a 20-year career managing mergers, acquisitions and financing as an investment banker and corporate executive. He holds a master’s in business administration from Harvard Business School and a bachelor’s degree from Williams College.Key Takeaways:The sale of Southern Tool St...

Frank Williamson is managing partner of FourBridges Capital Advisors, a middle-market investment bank – and the curator of IB South – that serves privately owned businesses in the Southeast. Frank has a 20-year career managing mergers, acquisitions and financing as an investment banker and corporate executive. He holds a master’s in business administration from Harvard Business School and a bachelor’s degree from Williams College.

Key Takeaways:

The sale of Southern Tool Steel supports several trends found in the Investment Banking South market survey, including:

Manufacturing is particularly strong in the Southeast and is an especially attractive sector to the M&A market.There is a lot of money from outside the region looking for deals in the Southeast. Money is willing to travel to the region because prices are inflated in other parts of the country.There is a lot of money chasing a few quality deals in the region, and it’s a seller’s market.

Even if a company has a few blemishes, it’s still a great time to sell if the business is properly packaged and the owner is emotionally ready. Despite interest in the Southeast from investors across the world and advancements in communication tools, proximity can still matter and give local investors an edge.

Q. How does the sale of Southern Tool Steel exemplify trends found in Investment Banking South’s annual market expectations survey?

A. The South is particularly hot for investors right now, and manufacturing is an especially strong sector within the M&A market. This sale supports both of those trends.

According to the survey, interest in manufacturing increased considerably this year over last – and Southern Tool Steel falls squarely in that sector. The findings also showed that there is a lot of money willing to travel to the Southeast from outside the region. In this particular sale, a Chicago-based buyer purchased a company headquartered in Chattanooga, so this transaction supports that trend as well.

Additionally, investors who responded to our survey – and those whom we’ve interviewed for IB South – have said that they’re seeing high competition for quality companies. Anecdotally, this rings true for us: we’ve seen quite a bit of interest in our clients that are founder-owned companies, like Southern Tool Steel, and there have been a good many stories of deals that began but failed to close.

Overall, we’ve observed – and heard from M&A experts across the region – that it’s a seller’s market for well-prepared businesses. However, being well prepared is the key.

Q. How does having a lot of outside money looking for deals in the Southeast change the dynamic when it comes to selling a business?

A. With outside money flowing into the region, we don’t have to convince people that they ought to be spending their time in the Southeast. When you’re dealing with a region people want to invest in, you’re selling with the current. It’s a lot more difficult when you’re working in an area that’s less attractive to investors, because you have to go against the natural flow.

In the Southeast right now, it’s more about the merits of the company and less about the region, which means the conversation is starting on the right foot.

Q. What does “well prepared” mean?

A. The seller needs to be ready for a transaction, which means having historical and projected numbers that tell the business’s story well and having corporate documents and contracts organized. The business plan needs to create a sense of urgency to develop momentum in the investor’s eyes. Most businesses don’t have an investor-ready business plan, so that’s one of our first steps when working with a business that’s getting ready to sell. By interviewing business owners at the outset and helping them organize their material, we can identify gaps in their thinking and encourage them to address these vulnerabilities.

That’s not to say there aren’t deals to be done with companies that aren’t in an ideal position to sell, though.

Even if a business has some warts – for example, maybe customer concentration is high or there’s no plan for growth – it could still be a good time to sell if the owner is truly ready. In those circumstances, a transaction will still require a solid five-year plan that aligns with potential investors’ goals, and more importantly, realistic expectations – from the owner’s perspective – about the company’s value.

Q. With outside money flowing into the Southeast, does it behave differently than money from within the region? Is it more aggressive or more likely to take risks?

A. It does behave differently. It is plentiful but actually more risk averse than local money. In a typical investment firm, there’s a small team of men and women responsible for deploying money and they only have so many hours in a day to find investments and to monitor them.

If a company is in Birmingham and investing in Alabama, they’ll know the business community and they’ll spend time with the company encouraging management to grow and fix problems because of the close proximity. If the same company is investing in a company in Portland, they won’t really know what the management team is up to between the few times a year they meet in person. If a company invests in a business across the country, it needs to have that much more trust in the team there, that many more checks-and-balances, or that much higher financial returns.

All else equal, the closer the money is, the more likely it is to take a risk. When you’re closer, surprises are more manageable. Technology has made a lot of things possible and it’s reshaped the business landscape, but when there’s a problem, you still have to be present.

Look out for the second installment of this interview on August 31, where Frank Williamson discusses why deal flow may be lower in the Southeast and what the impending baby boomer exit means for business owners.

]]>http://oaklynconsulting.com/what-the-recent-sale-of-southern-tool-steel-tells-us-about-the-ma-market-in-the-southeast-part-1Mergermarket Report: M&A Activity Spikes in the South as Anticipation of Bubble Burst Buildshttp://oaklynconsulting.com/mergermarket-report-ma-activity-spikes-in-the-south-as-anticipation-of-bubble-burst-buildsWed, 15 Jul 2015 15:00:00 GMTOaklyn ConsultingM&A activity spikes in the South as buyers and sellers anticipate bubble burst, rate hikeAnalysis by Deborah Balshem, MergermarketJuly 15, 2015M&A activity in the Southern US in the first half of 2015 showed no signs of fall off from the prior year, according to five industry sources.“Usually there is a drop in the number of transactions from 4Q to 1Q, as tax-driven deals cause a flurry of year- end closings, but this was not the case in 2015,” according toFrank Williamson, m...]]>M&A activity spikes in the South as buyers and sellers anticipate bubble burst, rate hikeAnalysis by Deborah Balshem, MergermarketJuly 15, 2015M&A activity in the Southern US in the first half of 2015 showed no signs of fall off from the prior year, according to five industry sources.“Usually there is a drop in the number of transactions from 4Q to 1Q, as tax-driven deals cause a flurry of year- end closings, but this was not the case in 2015,” according toFrank Williamson, m...M&A activity spikes in the South as buyers and sellers anticipate bubble burst, rate hike

M&A activity in the Southern US in the first half of 2015 showed no signs of fall off from the prior year, according to five industry sources.

“Usually there is a drop in the number of transactions from 4Q to 1Q, as tax-driven deals cause a flurry of year- end closings, but this was not the case in 2015,” according toFrank Williamson, managing partner of FourBridges Capital.

Deal activity in the Southern States was up by approximately 25% in 1H15, said Brooks Crankshaw, CEO of Highland Ridge Capital. “In many cases, valuations and multiples are more reasonable in the South due to lower cost of living and lower real estate prices. This attracts many out-of-state investors who are being priced out of their own markets,” explained Crankshaw, who said EBITDA multiples were approximately 7.3x in the South, versus approximately 10.5x in the US generally.

The South’s business-friendly tax and regulatory environment allows more of the capital invested in a business to stay in the business and fuel growth, which makes companies more attractive to both financial investors and strategic buyers, the sources said. Tennessee’s approach, in particular, is one of the most cohesive in the region when it comes to nurturing technological development. “Money goes to work earlier in the process, as their organized and structured accelerator model helps create early-stage investable companies,” Crankshaw said.

Tax incentives in Florida and the volume of healthcare companies based there is also conducive to M&A, the sources agreed.

Uncertainty around the timing and consequences of the recently announced Federal interest rate hike and the anticipation of a frothy market beginning to level off are two significant factors expected to drive M&A throughout the remainder of the year.

“Buyers and sellers are wondering how long this bubble will last,” said Andy Stockett, managing director at FourBridges. “Since 1926, there have only been five business cycles that lasted longer than 68 months. We hit that number this past January.”

Private equity funds have large amounts of capital to deploy and cash is still flush on corporate balance sheets, with many companies looking to use that cash to grow through acquisition, said the sources. The most active sectors include healthcare, technology and energy.

According to FourBridges' April 2015 survey that focused on Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina and Tennessee, private equity is especially interested in manufacturing, with a majority (56%) of manufacturing business owners saying they are getting more calls from PE groups this year than last year, whereas only 36% of non-manufacturing firms are seeing an increase in PE interest.

Corporates have been slower to close than PE firms and therefore have missed out on some of the best deals, but that tendency is slowly starting to change, according to Crankshaw. The trend of PE firms selling to other PE firms also is starting to trail off, with more founder-owned companies up for sale, Williamson said. There also has been an upswing in the number of sales among companies with less than USD 20m in revenue, added Steve Sapletal, a director at West Monroe Partners.

Some of the biggest Southern deals of the year included NXP Semiconductors NV’s acquisition of Texas- based Freescale Semiconductor for USD 11.1bn; Virginia-based MeadWestvaco Corp’s USD 8.2bn sale to Georgia-based Rock-Tenn Co; and Energy Transfer Partners’ USD 9.4bn purchase of Regency Energy Partners, both based in Texas.

In healthcare, Ventas acquired Tennessee-based Ardent Health Services for USD 1.75bn, and the USD 1.8bn merger of Kindred Healthcare and Kentucky-based Gentiva Health Services created one of the nation’s largest providers of long-term and acute-care hospitals, inpatient rehabilitation facilities, and hospice and home- health services.

Though a public offering for a technology company with several hundred million in revenue is a 'sexy option' right now, most mid-sized companies are less prone to go that route, said Sapletal. Bigger companies that need large, continued infusions of capital, such as REITs, are more likely to consider the public markets, Stockett said.

Cyber security companies continue to attract “an incredible amount of interest,” with many companies being acquired within a few years after start-up, Sapletal noted.

International M&A was “very quiet through the economic downturn but has come roaring back to life,” according to Reed Smith partner Lex Eley, who said he did more cross border-related work in the past 12 months than in any similar period dating back to 2008, mainly related to US companies seeking outbound investments.

Overseas activity also has been expanding from traditional European markets to more 'frontier' markets, such as the Middle East, Korea and South America. “Though people have been shying away from the Middle East due to the geopolitical situation, many clients are just not willing to wait any longer,” Eley said. “If they don’t make plays there now, they feel their competitors will.”

]]>http://oaklynconsulting.com/mergermarket-report-ma-activity-spikes-in-the-south-as-anticipation-of-bubble-burst-buildsThree Reasons You Should Sell Your Business in 2015http://oaklynconsulting.com/three-reasons-you-should-sell-your-business-in-2015Mon, 15 Jun 2015 16:00:00 GMTOaklyn ConsultingAfter nearly a decade of tumult and uncertainty, the U.S. economy has not only stabilized — it’s growing. Finally out of the winter of recession, unemployment rates are at their lowest point since June 2008, consumer spending and growth predications are both looking sunny, and Mississippi State Economist Derrin Webb predicts strong revenues and GPD growth for the Magnolia State.The business-for-sale market is also feeling the boom. ]]>After nearly a decade of tumult and uncertainty, the U.S. economy has not only stabilized — it’s growing. Finally out of the winter of recession, unemployment rates are at their lowest point since June 2008, consumer spending and growth predications are both looking sunny, and Mississippi State Economist Derrin Webb predicts strong revenues and GPD growth for the Magnolia State.The business-for-sale market is also feeling the boom.

After nearly a decade of tumult and uncertainty, the U.S. economy has not only stabilized — it’s growing. Finally out of the winter of recession, unemployment rates are at their lowest point since June 2008, consumer spending and growth predications are both looking sunny, and Mississippi State Economist Derrin Webb predicts strong revenues and GPD growth for the Magnolia State.

The business-for-sale market is also feeling the boom. Last year saw a record- breaking number of transactions in addition to businesses selling for more, with median sales prices rising by 3 percent in 2014 compared with 2013. And 2015 is proving to be just as strong.

It appears to be a seller’s market, but there’s no guarantee for how long it will last. Timing is everything when it comes to selling a business, and you never know when there could be bad weather on the horizon.

1. Tax increases: Tax increases and shifting regulations are often some of the biggest challenges for small and mid-sized businesses. There are currently federal proposals to raise the top marginal rate on capital gains, as well as subjecting more varieties of capital gains to taxes.

There were two tax-cut plans recently under consideration in the Mississippi state Legislature: one to phase out the state’s income tax by 2030 and the other to phase out corporate franchise taxes in 10 years. While it might seem advantageous to wait for these tax cuts before selling your business, they are not a sure thing. It’s important to remember even if they are eventually passed, they may not have a noticeable effect for a decade or more. With these tax reforms pending, business owners should consult with their accountants and investment advisers on the after-tax value of their business in current, higher and lower tax scenarios to determine the best time to sell.

2. Interest rates: As the economy continues to grow and strengthen, interest rates are likely to rise. With rates at a near-zero benchmark rate, the Federal Reserve is expected to lay the groundwork for its first iterest-rate hike since 2006. While the central bank’s open market committee suggests an immediate rate hike is unlikely, there are indications they may boost rates later in the year, as long as inflation remains near the Fed’s 2 percent target.

Higher interest rates means higher costs for doing business. And as debt becomes more expensive, servicing it will take a bigger bite of your company’s revenue, making it less attractive to potential buyers.

3. Saturated market: The baby-boomer generation, those born between 1946 and 1964, has founded more businesses than any other generation. According to the last census, the South is home to the largest number of baby boomers in the country. In Mississippi alone, nearly 13 percent of the population is over 65 years of age. These high numbers mean the M&A market will soon be flooded with baby boomers looking to retire and sell their businesses.

There are about 4 million U.S. companies owned by baby boomers, which comes to about 66 percent of all companies in the country with employees. Estimates suggest 65 to 75 percent of small businesses in the United States will be up for sale in the next five to 10 years as a result of this mass baby boomer exodus. With a larger supply of business than possible demand, business owners would do well to take a potential value decrease into account when creating a timeline to sell.

Knowing when to sell your business can be tricky. It’s crucial to understand the risks and rewards of selling or holding a business, all the while considering current and future conditions. One thing is certain: The 2015 market is primed for transactions. The economy may be sunny now, but, if there’s one thing the recession taught us it’s that a booming market, like the weather, can always turn.

]]>http://oaklynconsulting.com/three-reasons-you-should-sell-your-business-in-2015Why TN Business Owners Should Consider Selling Nowhttp://oaklynconsulting.com/why-tn-business-owners-should-consider-selling-nowFri, 08 May 2015 15:00:00 GMTOaklyn ConsultingThere’s little room for modesty in Tennessee these days. It’s no secret that Nashville’s thriving economy and eclectic cultural scene have energized a similar narrative for the state at large.National business media have heralded Tennessee as a top place for conducting commerce of all kinds. For starters, Nashville’s considered the third best city for starting a small business according to MSN Money and a top city in Forbes’ list for young entrepreneurs. ]]>There’s little room for modesty in Tennessee these days. It’s no secret that Nashville’s thriving economy and eclectic cultural scene have energized a similar narrative for the state at large.National business media have heralded Tennessee as a top place for conducting commerce of all kinds. For starters, Nashville’s considered the third best city for starting a small business according to MSN Money and a top city in Forbes’ list for young entrepreneurs. There’s little room for modesty in Tennessee these days. It’s no secret that Nashville’s thriving economy and eclectic cultural scene have energized a similar narrative for the state at large.

National business media have heralded Tennessee as a top place for conducting commerce of all kinds. For starters, Nashville’s considered the third best city for starting a small business according to MSN Money and a top city in Forbes’ list for young entrepreneurs. Even more, Tennessee has been named economic development “State of the Year” for the second year in a row by Business Facilities.

And while the national conversation in the business press about Tennessee tends to center around this being a great place to start and grow businesses, the economic environment here is ripe for selling businesses, too, thanks to Tennessee’s statewide vibrancy and sustained evidence of a growing national economy.

Increased economic confidence

The buyers of businesses who all but disappeared during the recession are hungry to find strong companies in which to invest. Consider the years 2013 and 2014, which saw a 55 percent growth in transaction amounts, according to a BizBuySell report. The transactions themselves sold for higher median revenues, rising by three percent in 2014.

This optimism undergirds the strong seller’s market we are now experiencing. It means buyers are more willing to negotiate and deals are more likely to close, especially for sellers in the South. This time last year, more deals had closed in the South than in any other region in North or South America, as recorded by Deal Drivers Americas.

The Southern economy no longer relies strongly on agriculture. There’s economic revival and an embracing of new identities — and new industries. Cities like Nashville, Memphis and Chattanooga have emerged as tech hubs, while many rural towns have become manufacturing hubs.

Old and new Tennessee companies benefit from this Southern renaissance. With eyes already on the state, companies have a built-in advantage of attracting buyers from across the country. And with more buyers come more competitive offers for businesses.

Looming baby boomer exit

Americans born between 1946 and 1964, the baby boomers, founded more businesses than any other generation.

Nearly 4 million companies around the country are owned by baby boomers, including about 66 percent of all companies in the United States with employees, as evidenced by a United States census survey. In classic boomer style, owners’ exits from these companies will be far from discreet, as it will happen within a relatively short time period, which has already begun.

The mass exodus will be so widespread that it’s estimated that 65 to 75 percent of small companies in the United States will be put up for sale in the next five to 10 years. Simply put, with more supply entering the market, value will decrease as buyers have more opportunities. With this on the horizon, now is an opportune time to sell, before the market becomes overcrowded with eager sellers.

Impending tax increases

The federal funds rate has been at record lows since 2008, which has helped lower the interest rates for millions of businesses. But with the revitalized economy, the Federal Reserve has hinted that these exceptionally low rates are nearing their end.

In addition, the Obama administration’s 2016 budget calls for raising the top rate on capital gains from 23.8 percent to 28 percent. For any company, it’s important to consider the after-tax value of a business in current and higher tax scenarios.

More often than not, time is the No. 1 killer of deals. Making the decision to sell may never be black and white, but it’s important to understand the costs and benefits of selling or holding. For business owners with a sale on the horizon, remember that good times always come to an end. It is time to make hay while the sun shines.

]]>http://oaklynconsulting.com/why-tn-business-owners-should-consider-selling-nowYou Need to Sell Your Business in 2015. Here's Why.http://oaklynconsulting.com/you-need-to-sell-your-business-in-2015-heres-whyMon, 16 Feb 2015 16:00:00 GMTOaklyn ConsultingOver the course of this past year, we in the middle market heard a near-constant refrain: this is the year to sell. And for many people, that was true. At a macro level, the economic outlook was positive, unemployment figures finally appeared to be cheerier, and interest rates were low. ]]>Over the course of this past year, we in the middle market heard a near-constant refrain: this is the year to sell. And for many people, that was true. At a macro level, the economic outlook was positive, unemployment figures finally appeared to be cheerier, and interest rates were low. Over the course of this past year, we in the middle market heard a near-constant refrain: this is the year to sell. And for many people, that was true. At a macro level, the economic outlook was positive, unemployment figures finally appeared to be cheerier, and interest rates were low. Things looked particularly bright for small- to mid-sized businesses: they were performing well, growing at a faster rate than the annual GDP, and increasingly gaining the attention of investors.

What’s changed in a year? Not much. Which is exactly why 2015 could be an even better time to sell. Key indicators like low interest rates, growing numbers of strategic buyers and increased buyer power point to continued economic health. And now, there’s an added bonus for owners thinking about going to market: they have sustained evidence of a robust and growing economy.

Compared to this time in 2014, we’ve put another year between ourselves and the stress of the recession. It’s another year of solid earnings on the books, signaling a larger universe of buyers, more room to negotiate terms, and greater odds of closing a deal. The years 2013 and 2014 are proof of this, seeing a 55 percent growth in transaction amounts. What’s more, businesses sold for higher median revenues, rising by three percent in 2014. Strong financial performance means sellers can secure more money on a sale, and with the economy primed for even further improvement, median sale prices should continue to rise in 2015.

Of course, this argument prompts the question: if 2015 is better than 2014, why not wait until 2016, or 2017, or 2018? Because the passing of time is a double-edged sword. Yes, it’s certainly a seller’s market – for now. But just as we’re another year out from the recession, we’re also another year closer to taxes increasing, interest rates rising, and a market saturated with baby boomers selling their companies and driving down value. While the timing is unpredictable, these shifts are inevitable.

Let’s take a closer look.

Right now, the environment is becoming more receptive to tax increases. For example, there are current proposals that would raise the top rate on capital gains from 23.8 percent to 28 percent and subject more varieties of capital gains to taxes. With the potential for change in the future, it’s not a bad idea to consider the after-tax value of a business in current and higher tax scenarios.

Interest rates could also increase, particularly as the economy continues to strengthen. Although private companies are valued on enterprise value – before interest rates – they’re still impacted by interest rate fluctuations. Simply put, increased rates increase the cost of doing business. As debt becomes more expensive, debt providers will take a bigger bite out of a company’s EBITDA, which inevitably will affect the M&A market.

Demographics play a role here, too, as our country is approaching a mass exodus of baby boomers into retirement. This group, born between 1946 and 1964, founded more businesses than any other generation. So as a generation made up largely of entrepreneurs and small business owners, there will soon be plenty of new folks entering the market.

To put this into perspective, close to 4 million companies around the country are owned by baby boomers. That comes out to about 66 percent of all companies in the United States with employees. It’s estimated that 65 to 75 percent of small companies in the United States will be put up for sale in the next five to ten years – due to the high number of baby boomers exiting the market. It’s simple economics to deduce that with more supply entering the market, value will decrease from an influx of buyer opportunity. Again, the savvy business owner will get ahead of this curve and proactively plan to sell before the market becomes saturated.

As a business owner, the decision to sell is not always black and white: it’s important to weigh the costs and benefits of selling or holding a business while factoring in multiple considerations, some of which have little to do with current conditions. But there’s no question that the market is ripe for transactions in 2015 – and time tends to be the number one killer of deals. If an opportunity has presented itself or you feel the timing is right, don’t wait. Carpe diem, or – for something a bit more timely – when you’re on the one-yard line, don’t throw a pass.

]]>http://oaklynconsulting.com/you-need-to-sell-your-business-in-2015-heres-whyAn Interview with Start It Up Radiohttp://oaklynconsulting.com/an-interview-with-start-it-up-radioFri, 19 Dec 2014 16:00:00 GMTOaklyn ConsultingOur dedication to the startup community means that we've listened to our faire share of pitches from early stage companies. Some have been good, others bad. In his recent Start It Up radio interview, Frank revealed his tips for making that 10-minute presentation count. ]]>Our dedication to the startup community means that we've listened to our faire share of pitches from early stage companies. Some have been good, others bad. In his recent Start It Up radio interview, Frank revealed his tips for making that 10-minute presentation count.

Our dedication to the startup community means that we've listened to our faire share of pitches from early stage companies. Some have been good, others bad. In his recent Start It Up radio interview, Frank revealed his tips for making that 10-minute presentation count. Listen to Frank's complete interview here.

]]>http://oaklynconsulting.com/an-interview-with-start-it-up-radioSouthern Manners Matterhttp://oaklynconsulting.com/southern-manners-matterWed, 03 Dec 2014 16:00:00 GMTOaklyn ConsultingThree of the top five merger and acquisition deals of the first part of 2014 in the Southeast happened in Georgia, totaling $5.6 billion in only one quarter. That deal volume doesn't stop at the state line. Georgia’s momentum is shared elsewhere in the region. ]]>Three of the top five merger and acquisition deals of the first part of 2014 in the Southeast happened in Georgia, totaling $5.6 billion in only one quarter. That deal volume doesn't stop at the state line. Georgia’s momentum is shared elsewhere in the region. Three of the top five merger and acquisition deals of the first part of 2014 in the Southeast happened in Georgia, totaling $5.6 billion in only one quarter. That deal volume doesn't stop at the state line. Georgia’s momentum is shared elsewhere in the region. According to a report in “Deal Drivers Americas,” more mergers and acquisitions were done in the South in the first half of the year than in any other region in North America. If this transaction velocity continues through the New Year, the South will have earned its place on the map as one of the most desirable areas in the country to do business.

Georgia has contributed significantly to the South’s economic growth. A recent CNN Money poll named Atlanta the sixth-best city in the country to start a business. The recent economic vitality there and across the South is also owed to something iconic to the region: Good manners.

Southern etiquette isn’t just white gloves and properly placed silverware. The notion that stopping to ask for directions could turn into an invitation to supper can also be found in Southern businesses. Respect and deference to others during negotiations, a commitment to roots and community, and a work-life balance philosophy are as much a part of professional attitudes as they are of socializing.

The rest of the country is starting to notice how these practices, along with entrepreneurship and resilience, have built businesses and industries that have made the South a region of thriving economic activity.

The South’s culture of civility isn’t something that can be separated from everyday life. It’s a part of Southern identity. So how do these traditions come into the boardroom? In the same way they would in someone’s home. Beverly Langford, management communications professor at Georgia State University, says professionals respond positively to a person who shows genuine workplace courtesy. GSU offers courses on professional etiquette, covering topics like manager-employee communication and interactions in co-working spaces.

In a world where civility is largely on the decline, a cultural appreciation for manners is a huge incentive for conducting business in a region. Little things like remembering names, congenial negotiation habits, eye contact and simple thank-you notes were all part of an Inc. article on business etiquette rules “that matter now.” For a Southerner, these practices are second nature.

These longstanding Southern traditions continue to pave the way for businesses to thrive. The business environment is stronger now than it has been in years, and it continues to grow. Matt Lane, senior vice president at GenCap America, a Nashville-based private equity firm, says if he could find “an adjective hotter than frothy” to describe the current market, he would use it.

Georgia is no exception to this regional trend. The state is known among entrepreneurs for tax rebates to attract businesses and a new streamlined process for getting a business license. The Georgia Department of Economic Development has started an “Entrepreneur-Friendly Initiative” to make support for entrepreneurship and small business a more deeply engrained part of the community.

Southern regional growth is attracting attention from around the country and the world. According to Commissioner Bill Hagerty of the Tennessee Department of Economic and Community Development, investors are increasingly interested in the region because valuation multiples are more reasonably valued in the South. Business-friendly tax environments also allow for capital invested in businesses to fuel future growth.

From B&Bs to boardrooms, etiquette, manners, Southern hospitality — however you refer to it — are inextricable pieces of Southern culture and invaluable guides for business practices. These important byproducts will ensure Southern businesses stand the test of time.

]]>http://oaklynconsulting.com/southern-manners-matterThere is Capital...You Just Don't Know How to Ask for Ithttp://oaklynconsulting.com/there-is-capitalyou-just-dont-know-how-to-ask-for-itWed, 20 Aug 2014 15:00:00 GMTOaklyn ConsultingWhen faced with hurdles in obtaining financing, some business owners throw up their hands and conclude there is no capital to access. That’s not true. While investors are inclined to say “no” in this post-recession environment, there are dollars out there. ]]>When faced with hurdles in obtaining financing, some business owners throw up their hands and conclude there is no capital to access. That’s not true. While investors are inclined to say “no” in this post-recession environment, there are dollars out there.

When faced with hurdles in obtaining financing, some business owners throw up their hands and conclude there is no capital to access. That’s not true. While investors are inclined to say “no” in this post-recession environment, there are dollars out there. To get your share of it, you must properly “sell” your business as a quality investment, and it’s much more than a numbers game.

Those asking for capital have the burden of proof.

When you’re asking for capital, you have the burden of proof. If you want to make a deal happen, think like the investors you’re pitching. What will they need to make a sound decision? Oftentimes it’s last year’s financials, customer contacts and the organizing documents for your business. Have all documents in line and ready to go. Being unprepared delays the process, gives an investor time to look elsewhere and hints that you may have organizational issues.

Translate to your potential investors’ language.

You and your management team may have your own way of communicating internally that’s not consistent with industry or business vernacular. Although it serves your purposes, it may be a barrier for someone who is on the outside looking in. Translate your systems and processes into a more universal format that they can easily digest and explain to colleagues. A good investor will speak your language pretty well, but most lending and investing decisions are collective. Don’t let anything get lost in translation.

Be upfront with financials.

Investors are people with jobs, too – and they also have goals, budgets and bosses. Help a capital provider to understand that “here are our sales and detailed expenses” means “here is how this company makes money and why, and what we can expect to make in the near future.” It is important to track financials in a lot of detail. Lenders and investors will need to check this and understand the economics of each product you produce or table you turn. Investors will not commit capital to something they can’t interpret and understand.

Even in an uncertain economy, small business owners can gain access to capital. The key is to understand what it takes: the business itself is important, of course, but so is the pitch you make. Be prepared, do your homework, and through every step of your investment campaign, put yourself in an investor’s shoes. They’re inclined to say no – but you can make it easy for them to say yes.

]]>http://oaklynconsulting.com/there-is-capitalyou-just-dont-know-how-to-ask-for-itPrivate Equity at Work: Tennessee, Georgia Draw More Investmenthttp://oaklynconsulting.com/private-equity-at-work-tennessee-georgia-draw-more-investmentSun, 13 Jul 2014 15:00:00 GMTShelly BradburyThe Tennessee Valley is known for its gritty factories, soaring dams, Southern hospitality and mountain views.It's not known for its hopping private equity scene.But perhaps it should be.Investors committed $7.7 billion in private equity through 53 transactions in Tennessee during 2013, putting the Volunteer State among the top 20 states in the nation. And not to be left behind, Georgia cracked the top 10 with $11.5 billion in private equity across 78 transactions, according to the Private Equit...]]>The Tennessee Valley is known for its gritty factories, soaring dams, Southern hospitality and mountain views.It's not known for its hopping private equity scene.But perhaps it should be.Investors committed $7.7 billion in private equity through 53 transactions in Tennessee during 2013, putting the Volunteer State among the top 20 states in the nation. And not to be left behind, Georgia cracked the top 10 with $11.5 billion in private equity across 78 transactions, according to the Private Equit...The Tennessee Valley is known for its gritty factories, soaring dams, Southern hospitality and mountain views.

It's not known for its hopping private equity scene.

But perhaps it should be.

Investors committed $7.7 billion in private equity through 53 transactions in Tennessee during 2013, putting the Volunteer State among the top 20 states in the nation. And not to be left behind, Georgia cracked the top 10 with $11.5 billion in private equity across 78 transactions, according to the Private Equity Growth Capital Council.

The council used data from industry analyst PitchBook to compile the list of states with the most private equity investment in 2013. Texas, California and Pennsylvania took the top three spots -- Texas secured $87.4 billion -- Georgia ranks 10th and Tennessee ranks 16th.

The Southern neighbors' high ranks are slightly startling, local experts say -- and a reflection of both a maturing private equity industry and the states' abilities to cultivate business-friendly environments.

Private equity has gained in popularity across the nation during the last 10 years, especially with investments between $20 million and $100 million dollars, Williamson said. Part of Tennessee's steady climb up the private equity ladder -- the state ranked 24th in 2012 and even lower in 2011 -- is driven by the nationwide growth.

"Twenty years ago [private equity] was a small thing that was a niche deal, and now it's a key centerpiece for activities," said Michael Brakebill, chief investment officer for the Tennessee Consolidated Retirement System. "There has been a huge change."

The Tennessee Consolidated Retirement System started investing in the private realm six years ago, and is authorized to commit as much as 3 percent of its $41 billion portfolio privately. So far, they've spent $443 million in private investments, Brakebill said.

"We sought to diversify the portfolio, both adding investment returns and diversifying our investment returns and lower the risk by adding private equity," he said.

It's a move many investors considered when the stock market stagnated. While private investments are volatile, they typically bring higher returns than the stock market and are often considered as a prime way to diversify portfolios, said David Smith, a partner at Lattimore, Black, Morgan & Cain.

Federal banking regulations discourage banks from investing in the high-risk world of private equity, Williamson added. The job of banks, regulators clearly say, is to make loans -- low risk, low return loans. Which left the door open for private investors. And as they turned to the private world, the industry flourished and grew nationwide. But Tennessee and Georgia's rise into the top states was never guaranteed.

"Private equity is not very conscious of geography," Williamson said. "It's a reflection, rather than a cause, of a good environment for people to build businesses. Money is more mobile than the company. And because money is mobile, it's going to find the best opportunity."

So $19.2 billion in private investment wouldn't have flowed into Tennessee and Georgia if there weren't worthy companies and worthy people based in the states, he said.

Nashville is a major hub for the health care industry, producing a handful of giant deals.

And Chattanooga tends to feed more bread and butter private equity deals into the state, like Quick Cue's sale to Open Table for $11.5 million, and North River Physical Therapy's sale to ATI Physical Therapy.

"Private equity dollars follow success," said Mike West, CEO and senior partner at BPV Capital Management, in Knoxville. "If good things are happening, there is momentum. Tennessee is rising up, and I'd expect it to continue to climb."

BPV just launched a new mutual fund on Tuesday by partnering with AJO, an asset manager in Philadelphia that manages almost $24.4 billion.

"The fact that a Tennessee firm has been able to partner with a $24 billion firm out of Philadelphia -- they could have partnered with anyone -- the fact that we landed that partnership says a lot about what is going on in Tennessee," West said. "At the end of the day, people follow successful endeavors and activities."

]]>http://oaklynconsulting.com/private-equity-at-work-tennessee-georgia-draw-more-investmentShowcasing the Entrepreneurial Ecosystem in Charleston, South Carolinahttp://oaklynconsulting.com/showcasing-the-entrepreneurial-ecosystem-in-charleston-south-carolinaTue, 06 May 2014 15:00:00 GMTOaklyn ConsultingI had the opportunity to represent FourBridges at DIG SOUTH earlier this month, participating in a panel on crowdfunding. DIG SOUTH founders Stanfield and Sunny Gray are doing a great service in my home state, drawing attention to the entrepreneurial ecosystem in Charleston, and bringing together two important groups: people who are building businesses and those who can help them grow and secure funding.I was honored to be part of a panel discussion with an engaging group of experienced investor...]]>I had the opportunity to represent FourBridges at DIG SOUTH earlier this month, participating in a panel on crowdfunding. DIG SOUTH founders Stanfield and Sunny Gray are doing a great service in my home state, drawing attention to the entrepreneurial ecosystem in Charleston, and bringing together two important groups: people who are building businesses and those who can help them grow and secure funding.I was honored to be part of a panel discussion with an engaging group of experienced investor...I had the opportunity to represent FourBridges at DIG SOUTH earlier this month, participating in a panel on crowdfunding. DIG SOUTH founders Stanfield and Sunny Gray are doing a great service in my home state, drawing attention to the entrepreneurial ecosystem in Charleston, and bringing together two important groups: people who are building businesses and those who can help them grow and secure funding.

I was honored to be part of a panel discussion with an engaging group of experienced investors, entrepreneurs and accelerator operators: Gavin McCulley, Angel Capital Group; Adam Lee, Bohemian Guitars; John Osborne, The Harbor Accelerator; Bobby Pearce, Smith Moore Leatherwood LLP and Zach Pousman of THINK Interactive, Inc. We had a thoughtful discussion on the “dos and don’ts” of crowdfunding, equity financing and raising investment capital. The two “suits” at one end, Bobby Pearce and me, cautioned investors to be careful what you ask for when seeking crowdfunding, because you might get it. Bobby highlighted that a company owes the same duty to the smallest shareholder as a large influential one, and I tried to help people see the practical costs to small businesses of having lots of shareholders rather than a few. Bobby, who has deep experience as a lawyer and company founder, encouraged South Carolina entrepreneurs to avoid extra regulation and seek accredited investors, in particular taking advantage of the state's Angel Investor tax credit.

Adam Lee, whose company was the first to be funded under the Invest Georgia Act using equity crowdfunding, helped people see how investment crowdfunding done right can be effective for both marketing and raising capital.

DIG SOUTH showcased the quality of entrepreneurial work coming out of regional accelerators, including winner of the Wild Pitch competition Dynepic, a company supported by Charleston’s Harbor Accelerator. College of Charleston students also had an impressive showing. David Wyman, director of the college’s Center for Entrepreneurship, did an excellent job coaching students for the Wild Pitch Students competition. The teams were impressive in both competitions.

The closure of the Charleston Naval Shipyard in 1996 was a big blow to the regional economy at the time, but it created an opening in Charleston for economic development by large and small businesses. Looking at it today, the base’s closing helped create an entrepreneurial ecosystem.

It is gratifying to see how Charleston turned this challenge into an opportunity. DIG SOUTH showcases this happy result. Those with an interest in entrepreneurship and economic development in South Carolina would be wise to attend the conference in the coming years.

Photo credit: Charleston.com

]]>http://oaklynconsulting.com/showcasing-the-entrepreneurial-ecosystem-in-charleston-south-carolinaMost Common Problems with Family-Run Midmarket Firms and How to Correct Themhttp://oaklynconsulting.com/most-common-problems-with-family-run-midmarket-firms-and-how-to-correct-themMon, 10 Mar 2014 15:55:00 GMTOaklyn ConsultingAccording to Family Enterprise USA, there are 5.5 million family-owned businesses in the U.S. These companies employ 63 percent of the workforce and contribute 57 percent of America’s gross domestic product, making them a crucial piece of our economy.Based on my experience advising family-owned businesses, the most common problems hindering a family business’s growth, profitability and value often stem from the lack of formality, leadership and process structure.This article will tak...]]>According to Family Enterprise USA, there are 5.5 million family-owned businesses in the U.S. These companies employ 63 percent of the workforce and contribute 57 percent of America’s gross domestic product, making them a crucial piece of our economy.Based on my experience advising family-owned businesses, the most common problems hindering a family business’s growth, profitability and value often stem from the lack of formality, leadership and process structure.This article will tak...

According to Family Enterprise USA, there are 5.5 million family-owned businesses in the U.S. These companies employ 63 percent of the workforce and contribute 57 percent of America’s gross domestic product, making them a crucial piece of our economy.

Based on my experience advising family-owned businesses, the most common problems hindering a family business’s growth, profitability and value often stem from the lack of formality, leadership and process structure.

This article will take an in-depth look at these challenges and offer solutions for leaders of family-owned businesses.

Challenge: Lack of defined leadership

Family relationships can blur leadership roles, leaving little room for accountability. Family businesses often have loose job functions because promoting or giving new titles to one family member could potentially hurt another family member’s feelings.

Operating under ambiguity and giving everyone a leadership role to avoid hurt feelings can negatively affect your business operations and even damage relationships, especially if family members are not qualified for the roles they are given.

To formalize the leadership hierarchy in your business and ensure family members are contributing valuable work:

Establish a clear chain of command for decision-making. If a family member does not have a role to play in this hierarchy, make sure he is aware of his position. Keep all business decisions objective. Initiate a non-family board of directors that can oversee business decisions and offer an outside perspective on new growth strategies. Create a formalized human resources department. This department is responsible for establishing and managing a process for hiring, firing and evaluating employee performance. All employees should have a clear understanding of their goals, and leaders should meet regularly with each employee to discuss progress in accomplishing those goals.

Challenge: Lack of formal financial reporting

Financial practices are often passed without change from generation to generation, leading to outdated reporting or a lack of reporting all together.

If no one in the family is up-to-date on current financial analysis practices, budgeting and planning will falter, which could cause long-term problems for the business—for example, not having a clear understanding of what your business is worth.

Solution: Start with the Basics

According to Inc. Magazine, fewer than 30 percent of family businesses survive to the second generation, and just 10 percent survive to a third generation. The good news for a family-run company is that these odds are far better that those of a non-family business.

Financial planning is crucial to increasing your odds of a profitable, longstanding business. These basic financial tips are a good place to start:

Incorporate and update the basic financial tools in your business, like balance sheets and income statements, to share with family members as well as with an outside accountant.Hire an independent CPA to perform a formal audit once a year. Follow the generally accepted accounting principles (GAAP) of federal reporting entities for the preparation of financial statements. Family companies have the benefit of planning for growth over a decade or generation, which takes the pressure off of quarterly earnings. Take advantage of this by staying current with market research and consistently updating your long-term business plan to keep everyone on the same page.

Challenge: Lack of a succession plan

Succession planning can be a problem for family businesses. According to the American Family Business Survey, almost a third of family business owners have no plans to ever retire, and another third report that retirement is more than 11 years away.

Although you can’t plan for a disaster, whether it is an unforeseen illness or a sudden decision to retire, a succession plan mitigates the risks of changing leadership and ensures that proper business operations remain in place.

Solution: Identify and mentor the next generation of leaders

What should you consider when choosing a successor?

Think about your personal goals—that is, the goals of the person who is leaving. What do you want to protect: an ongoing economic interest, your company’s culture, certain employees who have been loyal deputies, etc.? Also, consider the needs of other stakeholders, such as outside investors. What are they looking for in your replacement? Finally, consider the needs of your employees. Is there someone who particularly wants the top job? Is it important to have someone with customer relationships? Do you envision a certain employee having success as a successor?

Once you’ve identified the next leader or leaders of your business, focus on helping them understand the values and culture of the business you've built.

]]>http://oaklynconsulting.com/most-common-problems-with-family-run-midmarket-firms-and-how-to-correct-themUnderstanding Your Company’s Worth—A Step-By-Step Guide to Business Valuationshttp://oaklynconsulting.com/understanding-your-companys-wortha-step-by-step-guide-to-business-valuationsFri, 14 Feb 2014 16:00:00 GMTFrank WilliamsonBecause business owners are not immortal, every business faces one of two fates at some point: sale or closure. And every business owner—at least, every one I’ve known—prefers the former over the latter.Yet, very few of the 15,000 business owners in Greenville—much less the 70,000 in all of South Carolina—have a realistic idea of what their business is worth. This knowledge is not only essential to selling a business; it can also provide a marker for gauging the ong...]]>Because business owners are not immortal, every business faces one of two fates at some point: sale or closure. And every business owner—at least, every one I’ve known—prefers the former over the latter.Yet, very few of the 15,000 business owners in Greenville—much less the 70,000 in all of South Carolina—have a realistic idea of what their business is worth. This knowledge is not only essential to selling a business; it can also provide a marker for gauging the ong...Because business owners are not immortal, every business faces one of two fates at some point: sale or closure. And every business owner—at least, every one I’ve known—prefers the former over the latter.

Yet, very few of the 15,000 business owners in Greenville—much less the 70,000 in all of South Carolina—have a realistic idea of what their business is worth. This knowledge is not only essential to selling a business; it can also provide a marker for gauging the ongoing success of your business while you are operating it.

When you consider the value of your business, I recommend that you follow these five guideposts:

1) Understand When A Valuation Is Essential, and What Question It Answers

A business valuation can be useful at any point in a company’s life to reference how your organization is performing. However, in some cases, knowing your company’s worth can be the difference between maximizing opportunities and missing them entirely.

A business valuation is critical to these major company transactions:

Tax or Estate Planning, where you might ask, “How do I compare my business as an asset to other things I own, like a house, life insurance policy or investment portfolio?” Transfer of ownership, where people might wonder, “Will I treat everyone fairly when I give an interest in my business to a relative, employee or business partner?” Sale of a Business, when the question often is, “How much will someone able to buy my business actually pay for it, and how could I affect that number?”

2) Understand What Factors Influence Value

To truly understand what your company is worth, you must look beyond your balance sheet. The IRS recommends analyzing the following:

The nature and history of your business from inception. The overall economic outlook, as well as your industry’s current and projected condition. The financial condition of your business. Your company’s earning capacity. The existence or non-existence of goodwill or other intangible factors. The book value of your company’s stock sales of the stock and size of the block of stock to be valued. The market price of stocks or entities engaging in the similar line of business.

3) Understand the Best Valuation Approach for Your Business

There is no universal formula for a valuation. The strategy you employ depends on why you’re pursing a valuation and the state of your company and industry. Three basic approaches are used by business valuation professionals:

Asset Approach: Best for distressed businesses or those that will liquidate in the near future, this approach bases a company’s value off the sum of its assets on the balance sheet—both tangible and intangible. Market Approach: Ideal for large, robust and healthy companies, the market approach determines value by comparing the company against businesses within a similar industry, size or geographic area. Income Approach: The income approach values a business based on its generated income and is comprised of two methods—single–period capitalization and multiple-period discounting.

Single-period capitalization, which involves forecasting one typical future year, is ideal if past income has been steady and would serve as a reliable indicator of future income. Multiple-period discounting forecasts three to 10 years or more in some cases, and is ideal for quantifying the value of growth plans or possible future investments. My experience is that when business owners sell to professional investors, the meat of the conversation is based on a multiple-period forecast of income, discounted to the present.

4) Understand When To Adjust The Answer

The traditional three approaches will guide you to a sense of value for the whole business, but they don’t take factors like marketability and control into account. While such variables do not impact the outright value of a company, they do resonate with the interests of individual shareholders. For example, how should a grown child think about the value of her interest in a private company versus in a mutual fund? How should a minority business partner think about the value of his interest in the company when other people make the decisions?

5) Understand How To Leverage Your Value

Once you get the value of your business, don’t let that knowledge sit on a shelf. I’ve found that the insight a valuation provides can serve as one of your best business tools to drive up value.

Dig deep into financials to get a comprehensive view of what is driving your business and what is detracting from it. Make your numbers tell the story of what you have built and where it is going. Address customer concentration issues. If more than 20 percent of your revenue stream is coming from one source, diversify your income base to reduce risk. Empower your team so you have well-defined leaders capable of streamlining operations and making quality decisions. Delve into details of existing documents, including contracts and compliance records, to know where investors might see risks so you can address them yourself. Project future growth to help guide your decision making.

Valuing a business can be a complex process—certainly more involved than can be covered in a brief column. To learn more, call a valuation expert at an accounting firm or investment bank.

About the author: Frank Williamson is managing partner of FourBridges Capital — a Tennessee-based investment banking firm that serves business owners across the South. He has had a 20-year career managing mergers, acquisitions and financing as an investment banker and corporate executive. He holds a master’s in business administration from Harvard Business School and a bachelor’s degree from Williams College.

]]>http://oaklynconsulting.com/understanding-your-companys-wortha-step-by-step-guide-to-business-valuationsThe 12 Days of Christmas for Your Business-Complete Listhttp://oaklynconsulting.com/the-12-days-of-christmas-for-your-business-complete-listWed, 25 Dec 2013 17:00:00 GMTOaklyn ConsultingWith holiday hustle and bustle in high gear, many business owners are winding down—carving out time for the annual office party and preparing for a smooth coast into 2014. Though distractions tend to be abnormally high, the month of December is a valuable time to plan for success in the new year.Make the last few weeks of December count by implementing these 12 holiday housecleaning tips—our version of the “12 Days of Christmas for Your Business.”1. On the first day of Ch...]]>With holiday hustle and bustle in high gear, many business owners are winding down—carving out time for the annual office party and preparing for a smooth coast into 2014. Though distractions tend to be abnormally high, the month of December is a valuable time to plan for success in the new year.Make the last few weeks of December count by implementing these 12 holiday housecleaning tips—our version of the “12 Days of Christmas for Your Business.”1. On the first day of Ch...

With holiday hustle and bustle in high gear, many business owners are winding down—carving out time for the annual office party and preparing for a smooth coast into 2014. Though distractions tend to be abnormally high, the month of December is a valuable time to plan for success in the new year.

Make the last few weeks of December count by implementing these 12 holiday housecleaning tips—our version of the “12 Days of Christmas for Your Business.”

1. On the first day of Christmas, create a business roadmap: Throughout the year, it’s easy to lose focus of true business goals and priorities because we’re tackling urgent day-to-day activities. But what about our long-term business goals? With a new year just around the corner, now is the time to make sure you haven’t dropped the ball – no pun intended. Reassess and get reacquainted with your ambitions. Ask yourself: Where is the business now? How far has it come? Where do I want it to go?

Once you pinpoint these answers, create a detailed 2014 goal-fulfillment plan with checkpoints throughout each week, month and quarter of the new year. Remember, establishing quarterly goals is essential to achieving annual goals, which move you closer toward long-term goals.

2. On the second day of Christmas, review your finances: An annual financial review can help you spot small problems before they become big ones. Start with a personal review of your financial statements. If you are looking to sell, attract investors or receive financing in 2014, it’s important that your statements communicate not only how much money you made, but also how you made it. Go beyond the high-level overview to itemize your gross profit. This will allow buyers, investors or loan officers to assess what’s really driving profit for your company and create a better internal understanding of your financial situation.

3. On the third day of Christmas, forecast your financial growth: Understanding how much money you need for the next stage of your endeavor is a crucial step in planning for the year ahead. To forecast future growth, you can make assumptions based on previous performance data. On average, reviewing and analyzing 26 months of data for an established company is a good indication of how your business performs.

4. On the fourth day of Christmas, assess your brand: A successful 2014 starts with understanding your company’s personality. Reflecting on what makes your business unique, trustworthy and valuable will help define and more accurately direct your brand to a target audience. Once you’ve reflected on your brand, design a plan to stay the course or redirect your company’s brand.

5. On the fifth day of Christmas, evaluate your company culture: According to Forbes, disgruntled and disengaged employees cost the American economy up to $350 billion a year in lost productivity. On the other had, happy employees are twice as productive, more energized, apt to stay in their job longer and take fewer sick days. Company culture is the magic that makes or breaks a company.

6. On the sixth day of Christmas, tune into your personal goals: What are your personal goals? Do you hope to retire in five years? Are you a serial entrepreneur who wants to jumpstart several more companies? Do you want more family time? Reconnecting with your personal ambitions and desires should be part of your company’s plan for 2014.

7. On the seventh day of Christmas, evaluate your management team: The employees who help run your organization strongly determine the success of the business. Are you confident that your management team is secure in 2014? Are a handful of your company’s leaders reaching retirement age? Do you have junior managers who are prepped and ready to fill your senior managements’ shoes? The stability of your management team determines your day-to-day flexibility as CEO and is a major factor if and when you decide to sell your business. Buyers and investors value your company largely on the stability of your management team. After all, they’re the individuals who will remain if you exit the company.

8. On the eighth day of Christmas, focus on working smarter, not harder: To take your business to the next level, you must rise above the day-to-day grind and evaluate the systems and processes currently in place to ensure peak performance. So often, we mask challenges with quick fixes instead of addressing the root of the problem. In doing this, we continue to run into the same issues, which consume valuable time that could be used to grow our organizations. Think about constant challenges that arise in your business, and design a system that will act as a permanent solution.

9. On the ninth day of Christmas, evaluate your facility: Your facility’s design, structural appeal and location could play a large part in the customers and employees you attract. Additionally, if you’re planning for growth, you should ensure your existing location is able to support that evolution. Finding space, securing financing and negotiating a new lease or purchase can take anywhere from a few months to more than a year. Keep this timeline in mind as you plan for the coming year.

10. On the tenth day of Christmas, research your financing options: To grow, you may require financing. Traditional bank loans can be difficult to come by and may end up costing more than necessary. Talk with your investment banker to learn about securing financing options unique to your company, the possibility of private equity investments and debt financing solutions.

11. On the eleventh day of Christmas, survey your clients or customers: Your business’s mission revolves around serving your clients. There’s no better way to determine how you’re doing than by asking. Now is a great time of year to send a survey because as we all know, most people and businesses slow down around the holidays. This month, your clients will have time to reflect and give you genuine and useful feedback. There’s one condition, though: after your clients take the time to offer their opinions, start putting them to use.

12. On the twelfth day of Christmas, celebrate: You and your team have worked hard this year. Host a party or small get together for your team so you can enjoy the year’s successes together.

After you’ve accomplished the tips on this list, and checked them twice, you’ve successfully wrapped up 2013. Here’s to a happy and fruitful 2014 for you and your business.